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Critiques and Opposition to Government Economic Policies Quiz

Which of the following is a criticism of a laissez-faire economic policy?

It leads to income inequality

Explanation

Laissez-faire leads to income inequality.

It can lead to deflation

Explanation

Keynesian critique: Not leading to deflation.

There is a trade-off between inflation and unemployment

Explanation

Phillips Curve: Inflation vs Unemployment trade-off.

The decrease in private spending that results from an increase in government spending

Explanation

'Crowding out' effect: Govt. spending reduces private spending.