Name/Period__________________

Economics
Keynes vs. Hayek
Student Score_______/100

Keynes vs. Hayek Examination

Read First
You will have entire class period to finish the exam. Answer each question to the
best of your ability. Read and follow instructions for each section. This test will be
your answer sheet, you can write on the test as you see fit, but make certain answers
a clear and legible. If you complete the exam early, you may read quietly or work on
homework. Be respectful of classmates who may still be working on the exam.
Good luck and have fun!!!
Learning Target-Evaluate competing arguments and synthesize acquired
knowledge.
Standard- 3.1- Productive resources, natural, human, capital- are scarce; therefor
choices are made about how individuals, businesses, governments, and societies
allocate these resources.
Short Answer: 5 Questions 3 Points Each
Read each question carefully and answer to your best ability. Answers must be in
complete sentences. Spelling and grammar will be part of your grade. Write as
legibly as possible, if I cant read it you will lose points! Go get em!
1. What is Keynes theory about government spending?

2. What is Hayeks theory about government spending?

3. Whose economic theory is utilized in our current economic system?

4. Describe the business cycle.

5. What are animal spirits, according to Keynes?

True/False: 10 Questions 2 Points Each

Answer the following questions true or false using a capital T for true and a
capital F for false. Answer to the best of you ability, marking your answer in the
space provided. You got this!!!
1.______ Keynes was born in England.
2.______ Hayek was for government intervention in the economy.
3.______ Monetary Policy is set by the government.
4.______ The FED controls the flow of money into the economy.
5.______ The boom and bust cycle is a key component to Keynesian Economics.
6.______ Hayek believed that the economy is organic.
7.______ Keynes was against government intervention in the economy.
8.______ Fiscal Policy is set by the FED.
9.______ Hayek was born in Austria.
10.____ Our economic system is based on Keynesian Theory.
Multiple Choice: 10 Questions 2 Points Each
Use the space given to write in the best answer of the four options provided. Use
capital letters to answer each question. You know this stuff!
_____ 1. Keynesian economic theory suggests...
A. The economy is organic.
B. The government should intervene to help the economy.
C. The economy is should be left alone to fix itself.
D. The business cycle rules the economy.
_____2. Hayeks economic theory suggests...
A. Monetary policy is important to the economy.
B. The economy is dependent upon animal spirits.
C. The economy is organic and should be left alone.
D. The government should intervene tot help the economy.
_____3. The business cycle...
A. Is the cyclical nature of monetary and fiscal policies.
B. Is different from the boom and bust cycle.
C. Is the natural recessionary and expansionary cycle of the economy.
D. Is the cyclical nature of the government intervention in the economy.
_____4. The FED is the...
A. Fincancial Education Department
B. Federal Economics Division
C. Foundation of Economic Development
D. Federal Reserve

_____5. Monetary Policy is...

A. Policies introduced by the government to alter the economy.
B. Policies introduced by the FED to alter the economy.
C. Policies introduced by citizens to alter the economy.
D. Policies introduced by the president to alter the economy.
_____6. Fiscal Policy is...
A. Policies introduced by the government to alter the economy.
B. Policies introduced by the FED to alter the economy.
C. Policies introduced by citizens to alter the economy.
D. Policies introduced by the president to alter the economy.
_____7. Modern economics adheres to...
A. Hayeks Economic Theory
B. Keynesian Economic Theory
C. Neither Keynes or Hayek Theories
D. A mix of Keynesian and Hayek Theories
_____8. Hayek felt Keynesian economic theory would...
A. Have no Long Run effect.
B. Have a negative Long Run effect.
C. Have a negative Short Run effect.
D. None of the above
_____9. Keynes believed...
A. Animal spirits control the economy
B. Utilizing Fiscal Policy to manipulate the economy
C. Spending would help avoid recession
D. All of the above
_____10. GDP stands for...
A. Government Development Plan
B. Government Demolition Project
C. Grant Delivery Procedure
D. Gross Domestic Product

Matching: 5 Questions 3 Points Each

Match the best answer from the word bank to the question given. Write the capital
letter of your answer in the space provided. Use each answer only once. Some
words from the word bank will not be used. Be confidant, youre great!
A. Keynes
B. Hayek
C. Government

WORD LIST
D. Monetary Policy
E. GDP
F. Business Cycle

G. Fiscal Policy
H. FED
I. Animal Spirits

_____1. Who creates Fiscal Policy?

_____2. Who believed the economy to be organic?
_____3. Who creates Monetary Policy?
_____4. What type of policy does the Government set?
_____5. Who believed in Government intervention in the economy?
Essay: 3 Questions 10 Points Each
Answer each of the following questions to the best of your ability. Answer each
portion of the question. Answers must be 3-6 full sentences. Follow the rubric for
grading criteria. You may use a separate sheet of paper or the back of the exam if
you need more room for your responses. Utilize critical and analytical thinking
skills. Show how much youve learned!
Rubric for Essays:
10 points- Answers questions clearly and completely. Spelling and grammar are
correct. Utilizes critical skills and thought. Utilizes concepts and terms learned in
class. Shows obvious effort and thought.
7-9 points- Answers questions completely and clearly. Exhibits few spelling and
grammatical errors. Utilized critical thinking and thought. Shows effort and
thought. Utilizes some terms and concepts from class.
5-7 points- Incomplete answers or unclear and off topic. Contains numerous
spelling and grammatical errors. Lack of effort, thought, or critical thinking is
apparent. Little use of classroom terms and concepts.
1-5 points- Incomplete and inaccurate answers. Does not address question. Many
spelling and grammatical errors. Obvious lack of effort, thought, and critical
thinking. Little to no use of classroom terms and concepts.
0 points- Section missing.

1. Compare the key differences between Keynesian and Hayek economic theories.
Which theory do you believe is more valid? Why? Use economic reasoning in your
response.

2. Why is it important to understand and evaluate opposing points of view?

3. You are a highly revered economist. The U.S. economy is crashing and top
government officials are seeking your guidance. How will you advise them? Whose
economic theories ground your advice? What policies and action would you suggest
and why?

Reflection Questions: 3 Questions 3 Bonus Points Available

These questions are optional. If you answer, please be honest and thorough. Your
input is valued and appreciated!
1. On a scale of 1-10 (1 being not very much and 10 being very much) rank your
effort in preparing for this exam. Explain why you chose this ranking.

2. What study techniques did you utilize in your preparation for this exam?

3. List one thing you liked about the exam and one thing you would change
about this exam.

Answer Key
Short Answer- Answers will vary but should contain key points...
3 Points each
1. Keynes believes government should spend and create policy to stimulate
economy.
2. Hayek believes the government should not intervene in the economy because it is
organic and will fix itself.
3. Our current economic system is based and structured around Keynesian theory.
4. The business cycle is the cyclical nature of recessionary and expansionary trends
in our economy. Promoted by Hayek, also known as the boom and bust cycle.
5. Keynes uses the term animal spirits to describe peoples will and desire to save
or spend.
True/False2 Points Each
1. T
2. F
3. F
4. T
5. F
6. T
7. F
8. F
9. T
10. T
Multiple Choice2 Points Each
1. B
2. C
3. C
4. D
5. B
6. A
7. B
8. B
9. D
10. D

Matching3 Points Each

1.
2.
3.
4.
5.

C
B
H
G
A

Essay- Answers will vary but should contain key components.

10 Points Each
1. Keynes- Animal Spirits, Government and Personal spending, stimulation through
government intervention, prevention of recession.
Hayek- Organic market, let the economy fix itself, boom and bust/business cycle,
no government intervention.
2. Answers should be critical and unique
3. Answers should be grounded in critical thinking and economic principles.