Questions and Answers
Friedrich Hayek was a champion of the _____.
Market
Western leaders have claimed to embrace one central economic idea: the _____.
Free Market
According to Friedrich Hayek, a government leader should step back and _____.
Set the Market Free
Fans of the Austrian school and Friedrich Hayek believed that it was _____ not markets, that led to the financial crises.
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The Federal Reserve and banks cut interest rates to make it _____ to borrow money.
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Friedrich Hayek would have _____ the U.S. government's decision to cut interest rates.
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Friedrich Hayek believed that the problem with the Federal Reserve was that it _____ .
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Friedrich Hayek was born in the country of _____ in the city of _____.
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Friedrich Hayek's family were scientists. What theory was always stuck in Hayek's head: _____ .
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Friedrich Hayek believed the global market had _____ over the course of human history.
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Friedrich Hayek believed that government meddling in the supply of _____ could be most damaging of all.
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Friedrich Hayek believed the market does the most good when it is most _____.
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The inflation rate in Austria got so bad that the inflation rate hit _____.
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Friedrich Hayek got a position at the Institute for Business Cycle Research where he studied why economies were always lurching from one _____ or _____ cycle to another.
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Friedrich Hayek argued that the 'seeds of bust' were actually being sown during the _____.
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While in Austria, Friedrich Hayek studied the _____ economy to see what would happen next in his country.
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Friedrich Hayek blamed unsustainable booms & inevitable busts on central banks setting _____ rates on borrowed money.
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Benjamin Strong, governor of the Federal Reserve, believed he could use interest rates to influence the economy. This was the beginning of modern _____ policy.
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The Federal Reserve began buying up government debt to get more money into the economy & encourage households to borrow _____ money. It worked.
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The U.S. Stock Market crash began when interest rates began to _____ and investors realized the banks didn't have enough money to back investments.
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Friedrich Hayek believed that the Federal Reserve feeding the economy _____ credit caused the Crash & the Great Depression.
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Economist Paul Krugman asks, 'If it was all the Federal Reserve's fault, why did Europe have the exact same experience? It's because we have this Wild West _____ market.
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Friedrich Hayek had a 'grand dispute' with fellow economist _____.
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The economists argued over whether the government should step in when markets get into trouble. Keynes said _____ . Hayek said _____.
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Keynes saw economic problems like unemployment as _____ problems. Hayek believed that we didn't know enough about economics and that any intervention would only make things _____.
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The _____ was the first time an economy tried to spend its way out of a depression.
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Friedrich Hayek believed that the Depression was a return to _____.
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Both Bush and Obama chose _____ solutions to the financial crisis.
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Hayek's argument with Keynes was all about how best to make _____ work.
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Friedrich Hayek argued that central planning would always fail because economies are just too _____.
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Friedrich Hayek wrote a book attacking the British government called _____.
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Friedrich Hayek's warning against Big Government fit right in with the idea of American _____.
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Although Hayek disliked Big Government, he did believe it should provide some kind of _____ net....but his supporters don't like to talk about that.
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By the 1960s, Hayek had sunk into a depression until he was awarded the _____.
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Friedrich Hayek returned to prominence with the election of _____ as Prime Minister.
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In attacking the labor unions, Thatcher borrowed Hayek's idea of liberty to argue that workers were being put down by their union _____, not by the government.
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Hayek's most revolutionary idea was that money itself should be turned over to the _____.
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The biggest disagreement between Hayek & Thatcher was that Thatcher believed you could free the markets & still keep a lot of _____ at the center.
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Hayek believed we might uncover the laws of the universe, but we would never master the complexities of ____.
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Hayek wanted both governments & markets to avoid ____.
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Study Notes
Friedrich Hayek: Overview
- Friedrich Hayek was a leading advocate for the free market economy, believing in minimal government intervention.
- Born in Vienna, Austria, he grew up in a family of scientists, heavily influenced by Darwin's Theory of Evolution.
Economic Beliefs
- Hayek argued that government actions, rather than market forces, contributed to financial crises.
- He maintained that central banks, like the Federal Reserve, should not set interest rates, suggesting this involvement distorts the market.
- Hayek claimed the market functions best when it operates freely, without government interference.
Key Economic Concepts
- The term "free market" refers to an economic system with little to no government regulation.
- Hayek believed the manipulation of money supply by governments could lead to severe economic repercussions, including inflation.
- He criticized the concept of using monetary policy to influence economic outcomes, deeming it a flawed approach.
Historical Context
- Austria faced extreme inflation rates of up to 10,000%, showcasing the dangers of poor monetary policy.
- The U.S. stock market crash was precipitated by rising interest rates and a lack of sufficient bank backing for investments.
- Hayek's work displayed a fundamental disagreement with economist John Maynard Keynes on whether government intervention was necessary during economic downturns.
Theoretical Contributions
- Hayek's "The Road to Serfdom" critiques government overreach and advocates for individualism within capitalism.
- He believed that economic systems are too complex for effective central planning, resulting in inevitable failure.
- His theories emphasize the importance of decentralized economic decision-making and the natural evolution of markets.
Influence and Legacy
- Hayek's philosophy influenced both political and economic practices, particularly during the rise of Margaret Thatcher in the UK.
- His ideas remain central to discussions on deregulation and capitalism, especially against the backdrop of Keynesian economic policies.
- Awarded the Nobel Prize, Hayek returned to prominence in a period of renewed interest in free-market economics during the 1980s.
Criticism and Controversy
- Despite his advocacy for limited government, Hayek acknowledged the necessity of a safety net, although this aspect is often overlooked by his supporters.
- The clash between Hayek and Thatcher highlighted a core disagreement about the extent of government power while promoting free markets.
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Description
Explore the ideas of Friedrich Hayek, a prominent advocate for free market economics. This quiz covers his views on government intervention, monetary policy, and market regulation. Test your knowledge on Hayek's influence and the foundational concepts of free market economies.
