Topic 9: Institutionalism

German Historicism

1. Alexander Hamilton’s advocacy of tariffs to protect “infant industries” was later echoed
in the works of: (a) German historicists. (b) mercantilists. (c) American institutionalists.
(d) David Hume. (e) French physiocrats.
2. The implicit assumptions of classical and neoclassical economic theorists that culture
and historical time are irrelevant for useful economic analysis was most emphatically
rejected by: (a) utilitarianianism. (b) German historicism and American
Institutionalism. (c) mercantilism. (d) physiocracy. (e) logical positivism.
3. The German historical school had the most in common methodologically with: (a)
American Institutionalism. (b) Austrian economics. (c) classical economics. (d)
orthodox Marxism.
4. A school of thought that emphatically rejected the claim of neoclassical theorists that
culture and historical time are irrelevant for useful economic analysis is: (a)
utilitarianianism. (b) German historicism. (c) mercantilism. (d) physiocracy. (a) logical
positivism.
5. Mercantilist doctrines assumed that balance of trade surpluses create national wealth.
Alexander Hamilton argued that industrialization required protecting infant American
industries from mature foreign competitors. Lou Dobbs asserts that immigration and the
increasing globalization of economic activity harm blue-collar workers and middle-
class Americans. Policies derived from the preceding sets of positions on international
trade are most consistent with: (a) characterizations of bourgeoisie economic
development written by Karl Marx and Friedrich Engels in The Communist Manifesto.
(b) François Quesnay’s theory of the circular flow of income. (c) the nationalism
underpinning analyses by German historicists. (d) David Ricardo’s theory of
comparative advantage. (e) the regulation of business practices advocated by John
Rogers Commons.
6. Early developers of a theoretical rationale for American protectionism would include:
(a) Thorstein Veblen and John R. Commons. (b) Richard Nixon and Spiro Agnew. (c)
John Bates Clark and Irving Fisher. (d) Alexander Hamilton and Friedrich List. (e) John
Philip Sousa and John Kenneth Galbraith.
7. At the end of the 19th century American graduate students pursuing PhDs in economics
abroad would have been most densely clustered in: (a) Austria. (b) Paris. (c) Germany.
(d) Cambridge, England. (e) Sweden.
8. A famous debate about the relative merits of historical analysis versus abstract
modeling featured arguments between: (a) Friedrich List and Antoine-Augustin
Cournot. (b) Edwin Chadwick and Simon Newcomb. (c) Carl Menger and Gustav von
Schmöller. (d) Karl Marx and John Stuart Mill. (e) Alfred Marshall and Vilfredo
Pareto.

American Institutionalism

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9. Thomas Robert Malthus’ population theory influenced pre-marginalist classical
macrotheory in a manner paralleling the way: (a) Charles Darwin’s theory of evolution
influenced the institutionalist interpretation of change. (b) Sigmund Freud’s Interpretation
of Dreams shaped core concepts in modern public choice theory. (c) Zeno’s theory of a
stable universe influenced German historicists’ views of free trade. (d) Thorstein Veblen’s
theory of conspicuous consumption influenced Microsoft marketing strategies developed
by Bill Gates. (e) Albert Einstein’s theory of relativity influenced the mathematical
economics of Francis Ysidro Edgeworth.

10. The institutions in American “institutionalism” refer to: (a) public and private
institutions. (b) technical and ceremonial institutions. (c) market and non-market
institutions. (d) for-profit and non-profit institutions. (e) educational and business
institutions.

11. Thorstein Veblen would have been most likely to have condemned as a largely
“ceremonial institution” the: (a) U.S. electoral college. (b) U.S. Congress. (c) U.S.
Supreme Court. (d) U.S. Bureau of Prisons. (e) Federal Reserve System.

12. In assessing the debate between Zeno and Heraclites about whether stability of the universe
permits reasonably accurate forecasts of the future, the group most likely to side with
Heraclites would have been: (a) the Veblen wing of institutionalism. (b) neoclassical
economists. (c) public choice theorists. (d) Keynesians. (e) Austrian marginalists.

13. Thorstein Veblen’s view of human nature and economic behavior in many ways
echoes: (a) Benthamite utilitarianism. (b) Auguste Comte’s logical positivism (c)
Christian socialism. (d) Marxist socialism. (e) Darwian evolutionary thought.

14. Thorstein Veblen developed an evolutionary economics based on human adaptations to

ever-changing institutions, and categorized institutions as either: (a) sectarian or
humanitarian. (b) anthropological or historical. (c) technological or ceremonial. (d)
spiritual or materialistic.
15. A school of economic thought that developed in part as a reaction to the behavior of
such “successful” people as J. P. Morgan, John D. Rockefeller, and the Astor and
Vanderbilt families was: (a) Fabian socialism. (b) American institutionalism. (c)
neoclassical marginalism. (d) modern monetarism.
16. Karl Marx’s views were most completely echoed by the institutionalist: (a) Thorstein
Veblen. (b) John Kenneth Galbraith. (c) Clarence Ayers. (d) Wesley Clair Mitchell. (e)
John Roger Commons.
17. Karl Marx’s views were altered only slightly by Thorstein Veblen when Veblen
asserted that government: (a) is crucial for efficient production processes. (b)
suppresses the business class through unfair engineering advantages. (c) favors parasitic
businessmen (the bourgeoisie) by oppressing the engineering (working) class. (d)
understood the important role of engineers in profit maximizing.

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18. The economist who taught at the University of Chicago but who developed theories that
were most antithetical to the views of the 20th Century “Chicago School” of thought
was: (a) Joan Robinson. (b) Thorstein Veblen. (c) Irving Fisher. (d) George Stigler. (e)
Friedrich Hayek.
19. The idea that the desire of people to buy goods is culturally determined as opposed to
price determined is the view of: (a) Antoine Augustin Cournot. (b) Thorstein Veblen.
(c) Karl Marx. (d) Ludwig von Mises. (e) Irving Fisher.
20. The motives and behavior of wealthy people who drive luxurious gas-guzzlers, wear
flashy clothing and jewelry, cruise in sumptuous yachts, and own enormous homes
were addressed in The Theory of the Leisure Class, a book authored by: (a) David
Ricardo. (b) Thorstein Veblen. (c) Jeremy Bentham (d) Thomas Robert Malthus. (e)
Talcott Parsons.
21. Show-offs who flaunt their extravagant spending patterns are practicing behavior that
Thorstein Veblen condemned as: (a) conspicuous consumption. (b) snob appeal. (c)
keeping up with the Joneses. (d) tomfoolery. (e) exploitation.
22. The quote “But the rule holds with but slight exceptions that, whether warriors or
priests, the upper classes are exempt from industrial employments, and this exemption
is the economic expression of their superior rank,” identifies ideas expressed in: (a)
Karl Marx’s Das Kapital. (b) Adam Smith’s Wealth of Nations. (c) John Maynard
Keynes’ The Economic Consequences of the Peace. (d) Thorstein Veblen’s Theory of
the Leisure Class.
23. Thorstein Veblen criticized neoclassical theory as: (a) excessively theoretical and
inconsistent with self interested behavior. (b) based on nonscientific assumptions. (c)
excessively influenced by theories from psychology, sociology, and history. (d)
requiring significant adjustments because it was based on outdated assumptions. (e)
suitable for studying isolated individuals, but insufficiently general to explain
interactions between economic and social institutions.
24. Thorstein Veblen’s Theory of Business Enterprise stereotypes engineers in a way
similar to Karl Marx’s characterizations of: (a) industrial proletariat. (b) petite
bourgeois. (c) such robber barons as J.P. Morgan, Andrew Carnegie, and John D.
Rockefeller. (d) MBA students. (e) female homemakers.
25. Thorstein Veblen would have viewed modern investment bankers as: (a) members of
the proletariat. (b) entrepreneurs. (c) sophisticated bean counters. (d) financial
engineers. (e) parasites.
26. A cultural relativist with respect to his views on modern culture and its assumed
superiority was the notably eccentric: (a) Thorstein Veblen. (b) Thomas Malthus. (c)
Carl Menger. (d) Wesley Clair Mitchell. (e) John Kenneth Galbraith.
27. The most vehement objections to the use of marginal utility theory were voiced by: (a)
Thorstein Veblen. (b) Friedrich von Wieser. (c) John Bates Clark. (d) Milton Freidman.
(e) John R. Commons.

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28. The thinker most likely to have vehemently opposed using complex mathematics as a
way to describe economic behavior would have been: (a) Adam Smith. (b) Vilfredo
Pareto. (c) Leon Walras. (d) Irving Fisher. (e) William Stanley Jevons. (f) Thorstein
Veblen.
29. Belief that incessant and unpredictable change renders useless the analyses of
deterministic orthodox economics was central to critiques of the conventional wisdom
by: (a) Karl Marx. (b) Leon Walrus. (c) Thorstein Veblen. (d) Alfred Marshall.
30. Thorstein Veblen’s view that deterministic orthodox economic analysis is not useful
because technological changes and incessant and unpredictable behavioral adjustments
based on erratic sociological and cultural factors is most compatible with a view of the
universe first expressed by: (a) Zeno. (b) Plato. (c) Aristotle. (d) Heraclites. (e)
Aphrodite.
31. The major difference between Thorstein Veblen and his orthodox contemporaries is his
view that: (a) biological and cultural change are equally important when studying
evolution. (b) evolutionary change is almost exclusively biological. (c) evolutionary
change is due to lots of factors. (d) evolutionary change is almost exclusively cultural.
32. Thorstein Veblen viewed human behavior as dominated by: (a) perfectionism. (b) the
quest for wealth. (c) instinctive behavior and habits. (d) charitable needs to help one
another. (e) desires to procreate.
33. The individual most adamant in condemning the notion that utilitarian calculation is the
foundation for human behavior would have been: (a) Jeremy Bentham. (a) Friedrich
Wieser. (c) Alfred Marshall. (d) Thorstein Veblen. (e) Jules Dupuit.
34. Anthropological and sociological theories underpinned many of the views of the
American philosopher: (a) John Dewey. (b) Benjamin Franklin. (c) Thomas Jefferson.
(d) Alexander Hamilton. (e) Thorstein Veblen. (f) William James. (g) John Bates Clark.
35. Thorstein Veblen viewed social and economic relations as ultimately dominated by: (a)
evolutionary biology. (b) the evolution of ceremonial and technological institutions. (c)
variations in laws and regulations. (d) desires for wealth. (e) progress driven by
entrepreneurial innovations.
36. The ideas of Karl Marx and Thorstein Veblen are least consistent on the issue of
whether capitalism is: (a) plagued by boom-bust business cycles. (b) efficient and
equitable. (c) doomed to end in a violent revolution. (d) beneficial to capitalists in the
short run. (e) likely to create widening gaps between the rich and the poor.
37. According to Thorstein Veblen, a community’s cultural institutions and their “world
view” are most heavily influenced by: (a) technology. (b) philosophy. (c) religion. (d)
politics.
38. The view that people are not merely “lightning fast calculators,” but instead are creatures of
instinct and habit was central to the theories of: (a) Léon Walras. (b) Jeremy Bentham. (c)
Thorstein Veblen. (d) Wesley Mitchell. (e) Herbert Spencer.

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39. Where classical theorists viewed people as “rational calculators of pleasure and pain”
Veblen viewed people as (a) profit maximizing entrepreneurs. (b) money hungry
capitalists. (c) risk adverse price takers. (d) masses of individuals making up collective
demand. (e) creatively curious, creatures of propensities, conformity, and habits.
40. Thorstein Veblen launched a detailed inquiry into the practice of consumption and the
formation of tastes in his: (a) The Theory of Liquidity Preference. (b) The Theory of the
Leisure Class. (c) The Theory of Value. (d) Inconsistencies Between The Theory of
Money and Human Values.(e) The Real Wealth of Nations.
41. Thorstein Veblen’s theory of consumption as grounded in basic human instincts reflects
his rejection of the theory of: (a) emulation. (b) self preservation. (c) utility
maximization. (d) conspicuous consumption. (e) social aggrandizement of the self.
42. Thorstein Veblen’s concept of conspicuous consumption suggests that: (a) people
consume goods in direct proportion to the amount of income they receive. (b) people
consume goods based solely on their biological needs. (c) decisionmakers’
consumption patterns accommodate the needs of their families. (d) the snob effect may
cause some people’s demand curves for some high-status goods to be upward sloping
because of the psychic income people these receive by showcasing their wealth through
ceremonial extravagance. (e) goods will be purchased only if priced lower than goods
that generate as much marginal utility.
43. That some women would prefer extremely expensive real fur coats to much cheaper but
indistinguishable faux fur coats. (made of, e.g., polyester) of even higher quality is most
reasonably an example of: (a) Adam Smith’s theory of self-interest. (b) the snob (or
Veblen) effect. (c) a Utopian socialist distribution mechanisms. (d) John Stuart Mill’s
social theory. (e) Austrian value theory.
44. The upward sloping Veblenian demand curve implies that prices are often influenced
by: (a) a producer’s inclination to supply more at higher prices. (b) the spending
“habits” and bargain “instincts” of consumers. (c) technological displacement caused
by innovation. (d) a consumer’s notion of other people’s values.
45. Not among major premises of Thorstein Veblen’s writings is the idea that: (a) property
acquisition is a significant activity in the quest for social esteem. (b) businessmen are
parasites who acquire unjust shares of the income produced by “engineers.” (c)
institutions are either technologically productive or ceremonial. (d) capitalism will
succumb to national socialism as society advances. (e) people use conspicuous
consumption as a mechanism to enhance their positions in the social pecking order.
46. Thorstein Veblen would tend to most strongly reject: (a) Say’s law. (b) Marx’s theory of
business cycles. (c) Malthus’ belief that underconsumption is possible. (d) Adam Smith’s
assertion that people are self-interested. (e) widespread irritation in the US about corporate
scandals centered on fraudulent accounting.
47. In his The Theory of Business Enterprise, Thorstein Veblen categorized the working
class as comprising: (a) engineers and business people. (b) masters and slaves. (c) blue
collar and white collar cadres. (d) line workers and supervisors. (e) production workers
and service workers.

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48. A conscientious withdrawal of efficiency, according to Veblen, occurs when businesses:
(a) increase output. (b) use blind variation. (c) reduce output to the most profitable
level. (d) increase production so that supply equals demand. (e) reduce output to match
that of its competitors.
49. Conscientious withdrawal from efficiency, a term coined by Thorstein Veblen,
suggested that business firms: (a) reduce output to lower competition among
themselves. (b) increase output to create inefficiency in the market. (c) reduce output to
the most profitable levels. (d) create a monopoly in the market place. (e) exit markets
when profits are low.
50. Thorstein Veblen’s theory of pecuniary emulation hypothesizes that, in striving for
pecuniary achievement: (a) productive work becomes viewed as a mark of mental
infirmity. (b) leisure becomes a consumption good. (c) a leisure class develops. (d) all
of the above.
51. The prediction that engineering majors from N.C. State are more likely to be efficient
production managers than are business majors from UNC is most consistent with the views
of: (a) Joseph Schumpeter. (b) Eugen Bohm-Bawerk. (c) Thorstein Veblen. (d) H.K. von
Mangoldt. (e) H.H. Gossen.
52. The theorist who, if alive today, would be least likely to join a fan club for any
entrepreneur, was: (a) Van Mangoldt. (b) Richard Cantillon. (c) Joseph Schumpeter. (d)
Thorstein Veblen.
53. What, according to Thorstein Veblen, resulted in an upward sloping demand curve? (a)
conspicuous consumption. (b) Inordinately high luxury taxes. (c) Inelasticity of goods. (d)
High interest rates on home loans.
54. An economist who vigorously disputed the idea that people are “lightning fast calculators
of pleasure and pain” was: (a) John Maynard Keynes. (b) Thorstein Veblen. (c) John Stuart
Mill. (d) William Stanley Jevons.
55. Thorstein Veblen would be most likely to argue that: (a) culture and institutions are
evolving towards an unpredictable end. (b) culture and institutions are evolving towards a
predictable end. (c) culture and institutions are not evolving, per se. (d) culture and
institutions are regressing towards an anarchy state.
56. The views of Thorstein Veblen most closely resemble important parts of the theories of: (a)
Adam Smith. (b) Karl Marx. (c) John Stuart Mill. (d) John Maynard Keynes.
57. Thorstein Veblen argued that Neoclassical Economics were largely irrelevant by his time
due to the central focus on _______ and lack of concentration on _________.: (a) society;
individual. (b) individual; corporation. (c) individual; society. (d) corporation; society.
58. Thorstein Veblen did not use the term “fictitious commodities” to refer to: (a) land. (b)
labor. (c) capital. (d) agricultural products.
59. The institutionalist never promoted above assistant professor who gave all his students Cs
to prevent any of them from being eligible to join Phi Beta Kappa was: (a) Thorstein
Veblen. (b) Wesley C. Mitchell. (c) John Kenneth Galbraith. (d) John Commons. (e)
Clarence Ayers.

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60. “Conspicuous consumption,” conspicuous leisure,” and “pecuniary emulation” are terms
best associated with: (a) Thorstein Veblen. (b) John Commons. (c) Beatrice Webb. (d)
Eugen Bohm-Bawerk. (e) Richard Tawney.
61. The idea that profit-seeking firms restrict output through monopoly, thereby holding back
technological development, was discussed in length in The Theory of Business Enterprise.
(1904) by: (a) John Commons. (b) Thorstein Veblen. (c) Beatrice Webb. (d) Richard
Thaler. (e) Richard Tawney.
62. Which of the following works was least influential in the development of modern economic
theory as it is understood today? (a) Adam Smith: “Wealth of Nations”. (b) Karl Marx:
“Capital”. (c) John Maynard Keynes: “The General Theory of Employment, Interest and
Money”. (d) Thorstein Veblen: “The Theory of the Leisure Class”.
63. The American institutionalist who focused on and furthered Veblen’s views on technology
was: (a) John Rogers Commons. (b) Wesley Clair Mitchell. (c) John Kenneth Galbraith. (d)
Clarence Ayers.
64. The thinker whose ideas are least consistent with broad libertarian principles is: (a) Milton
Friedman. (b) Ayn Rand. (c) Friedrich Hayek. (d) John Rogers Commons. (e) David
Ricardo.
65. John R. Commons’ agenda of reforms for American labor markets did not include laws
mandating: (a) overtime pay. (b) worker’s compensation. (c) job safety. (d) unemployment
compensation. (e) the permissibility of collective bargaining.
66. John Commons was not an advocate of: (a) worker compensation for on-the-job injuries.
(b) peaceful collective bargaining. (c) unemployment insurance. (d) the marginal
productivity theory of income distribution.
67. Much of the New Deal legislation of the 1930s, including public utility regulation,
collective bargaining, and labor dispute mediation, was built from the regulatory
framework pioneered by: (a) John Rogers Commons. (b) Karl Marx. (c) Paul Samuelson.
(d) Mary Wollstonecraft. (e) Jane Addams.
68. John Commons notably believed that important production and distribution processes that
were natural monopolies: (a) would generate only normal profits for the owners. (b) should
be owned by society and run by government. (c) produce inefficiently if they price
discriminate. (d) tend to have variable costs that exceed fixed costs. (e) should charge a
single uniform price equal to average cost.
69. Not among the scholars working in Europe who were pivotal in “the marginalist
revolution” was the great economist: (a) Leon Walras. (b) Jules Dupuit. (c) Antoine-
Augustin Cournot. (d) Carl Menger. (e) John Rogers Commons.
70. Much of the thrust of modern business regulation, municipal ownership of many public
utilities, and price discrimination in utilities’ rate structures, are among the legacies of the
economic thinker: (a) Joan Robinson. (b) Thorstein Veblen. (c) John Rogers Commons. (d)
Sidney Webb. (e) Jean Claude Belmondo.

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71. The American institutionalist who most prominently and successfully championed social
and economic reform through regulation was: (a) John Rogers Commons. (b) Wesley Clair
Mitchell. (c) Thorstein Veblen. (d) Clarence Ayers.
72. Beginning in the 1970s, deregulation of numerous industries was increasingly
advocated by both Democrats and Republicans; which represented a shift away from
the ideas and ideals of: (a) traditional conservatism. (b) 19th Century liberalism. (c)
avant-garde socialism. (d) supply-side economics. (e) institutionalists who powerfully
shaped microeconomic aspects of “New Deal” liberalism. (f) neo-conservatism.
73. The institutionalist who established the National Bureau of Economic Research to
provide economics with a sounder statistical foundation was: (a) John Commons. (b)
Wesley Clair Mitchell. (c) Clarence Ayers. (d) Galbraith. (e) Robinson.
74. The institutional economist who established the National Bureau for Economic
Research, an agency originally focused on the study of economic performance, was: (a)
Wesley Clair Mitchell. (b) John Kenneth Galbraith. (c) Alfred E, Newman. (d) John R.
Commons.
75. The American institutionalist who analyzed business cycles exhaustively using then-
modern statistical techniques, and who established the National Bureau of Economic
Research, was: (a) John Rogers Commons. (b) Wesley Clair Mitchell. (c) Thorstein
Veblen. (d) Clarence Ayers.
76. The well-publicized “principal-agent problems” [bezzle] that plagued giant
corporations in the early 2000s were originally described in 1932 by Adolph A. Berle
and Gardiner Means as problems associated with. (a) separation of ownership from
control. (b) bureaucratic red tape. (c) command and coordination. (d) conflicting class
interests. (e) technostructure.
77. In The Modern Corporation and Private Property. (1932), Adolph Berle and Gardiner
Means documented the dominant position of the large corporation in the modern economy,
the growing dispersion of ownership of common stock, and the separation of ownership
from control. These last two developments brought to light a particular sort of moral hazard
dilemma called: (a) Pareto efficiency. (b) bureaucratic gambling. (c) adverse selection. (d)
the principal-agent problem. (e) regulatory forbearance.
78. The thinkers least likely to have been surprised when informed that prizes for conformity
of cows or bulls to aesthetic standards are unrelated to the animals’ likely production of
either meat or milk would have been: (a) neoclassical macroeconomic theorists. (b) game
theorists. (c) American institutionalists. (d) Austrian economists. (b) French engineers.
79. Thorstein Veblen’s concept of conspicuous consumption in “The Theory of the Leisure
Class” had the greatest influence on: (a) advocacy of “survival of the fittest” by
William Graham Sumner and Herbert Spencer. (b) John Kenneth Galbraith’s central
themes in his “The Affluent Society.” (c) John Maynard Keynes’ “The General Theory
of Employment, Interest, and Money.” (d) Joan Robinson’s “The Theory of Imperfect
Competition.” (e) development of the structure conduct  performance paradigm.

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80. The American institutionalist who focused on the crucial role of advertising in creating and
manipulating demand for consumer goods was: (a) John Rogers Commons. (b) Wesley
Clair Mitchell. (c) John Kenneth Galbraith. (d) Clarence Ayers. (e) Steven leavitt.
81. Not among John Kenneth Galbraith’s ideas would be the notion that: (a) society
benefits most when the government’s goal is economic growth and greater output. (b)
producers influence the decisions of consumers through advertising and salesmanship.
(c) giant corporations manipulate markets and sometimes dominate government
policies. (d) wasteful private consumption comes at the expense of social and public
goods.
82. The idea that advertising artificially and undesirably inflates consumer demand is the key
point of: (a) Monopoly Capitalism, by Paul Baran and Paul Sweezey. (b) Thomas Carlyle’s
The Age of the Economist. (c) Robert Heilbronner’s The Unworldly Philosophy of
Economics. (d) The Affluent Society, by John Kenneth Galbraith.
83. The economist who proposed “countervailing power” as a remedy for abuses of power
in his book American Capitalism is: (a) John Kenneth Galbraith. (b) Alfred Marshall.
(c) Carl Menger. (d) William Stanley Jevons. (e) Thorstein Veblen.
84. In The Great Crash, John Kenneth Galbraith theorized that regulation and deregulation
are cyclical phenomena. Prosperity is accompanied by deregulation and increases in
corporate fraud, while economic downturns lead to the exposure of corporate
improprieties, resulting in new regulation, which is then moderated during the next
prosperous period, and so on. Galbraith labeled corporate fraud the: (a) bilk. (b)
bamboozle. (c) bungle. (d) bunco. (e) bezzle.
85. A 6’9’ economist highly critical of the economic power of big business and an advocate
of a “new socialism” through government supervision despite the immense prosperity
of the past six decades was: (a) Gordon Tullock. (b) John Kenneth Galbraith. (c) Eli
Hechscher. (d) Paul A. Samuelson.
86. John Kenneth Galbraith believed that the effect on demand of pervasive and exorbitant
advertising is: (a) inconsequential because consumers are driven solely by self-interest.
(b) insignificant because consumers become numb after being inundated with so many
marketing gimmicks. (c) beneficial in properly aligning true market quantity supplied
and quantity demanded. (d) to lead many people to believe they need things they really
don’t. (e) to shift demands from private goods to excessive reliance on social and public
goods.
87. The American institutionalist who developed the notion of “countervailing power” and who
argued that income inequality “distorts the use of resources” was: (a) John Maynard
Keynes. (b) John Kenneth Galbraith. (c) Karl Marx. (d) John Rogers Commons. (e)
Clarence Ayers.
88. The idea that in a market economy, many people’s desires to buy certain goods are far
more culturally determined than merely price determined is a view shared by: (a) A. Jules
E. Dupuit and Antoine Augustin Cournot. (b) John Kenneth Galbraith and Thorstein
Veblen. (c) Karl Marx and Cornelius Vanderbilt. (d) Carl Menger and Ludwig von Mises.
(e) Irving Fisher and Milton Friedman. (f) Hugo Grotius and John Locke. (g) John
Commons and Richard Cantillon.

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89. The Affluent Society (1958) by social critic John Kenneth Galbraith attacks the _________
that economic growth and greater output are necessarily a good thing.: (a) quid pro quo. (b)
conventional wisdom. (c) supply side theory. (d) incomprehensibly stupid left-wing liberal
idea. (e) none of the above.
90. In The Affluent Society, John Kenneth Galbraith argues that private individuals’ demand
curves do not reflect marginal personal benefits because excesses of consumer goods are
purchased instead of social goods because of: (a) international tariffs. (b) marketing and
advertising. (c) lack of anti-trust enforcement. (d) poor public educational options.
91. The view that American capitalism has left too many people impoverished while enriching
the fortunate few, with the result that private goods are consumed relatively too much and
public goods relatively too little, was central to the views of: (a) John Kenneth Galbraith.
(b) Milton Friedman. (c) Paul Samuelson. (d) Joan Robinson. (e) George Stigler.
92. An American institutionalist coined numerous terms, including: [1] acquisitive society [to
explain systematic “underfunding” of government projects and the expansion of private
“conspicuous consumption;” [2] conventional wisdom [for incorrect but popular theories];
[3] bezzle [for the monetary amount of bookkeeping mischief within big business]; [4]
countervailing power (for the idea that social welfare is enhanced by competition between
such power blocs as big labor and big business); and [5] technostructure [for managerial
and other professionals who dominate decisions in huge bureaucracies]. This very tall
economist is: (a) Thorstein Veblen. (b) Wesley Clair Mitchell. (c) John Commons. (d) John
Kenneth Galbraith. (e) Clarence Ayres.
93. John Kenneth Galbraith’s bezzle concept would apply least well to: (a) exaggerated
official statistics on the USSR’s economic growth during 1929-1985. (b) Sadaam
Hussein’s refusal to honor agreements allowing access by UN arms inspectors during
1994-2002. (c) the Annual Reports of Enron and WorldCom during 1990-2002. (d)
widespread corporate shenanigans prior to establishment of the Securities and Exchange
Commission [SEC] in 1933. (e) high pressure sales of corporate stocks by operators and
employees of “boiler rooms.”
94. The theory that the magnitude of “bezzle” [corporate fraud] and pressure for
deregulation are both positively related to the level of prosperity in a country, and that
the discovery and prosecution of bezzle and pressure for more regulation emerge during
downturns in economic activity was authored by: (a) John Kenneth Galbraith. (b) John
Maynard Keynes. (c) Paul Samuelson. (d) Milton Friedman. (e) Myron Scholes.
95. In The Affluent Society, John Kenneth Galbraith asserted that advertising is a major
force in causing: (a) private wealth and public poverty. (b) government to be controlled
by special interest groups. (c) lower transaction costs. (d) industry growth. (e) business
cycles.

96. Not among the works of John Kenneth Galbraith was: (a) The New Industrial State. (b) The
Affluent Society. (c) Economics and The Public Purpose. (d) The General Theory of
Income, Employment, and Interest.
97. The thinker least likely to defend the fairness of the marginal productivity theory of
income distribution would have been: (a) Herbert Spencer. (b) John Bates Clark. (c)
Ayn Rand. (d) John Kenneth Galbraith. (e) H.K.E. von Mangoldt.

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98. A John whose ideas are least consistent with the American institutionalist paradigm
was: (a) John Bates Clark. (b) John Maurice Clark. (c) John Kenneth Galbraith. (d)
John Commons.
99. A list of heterodox economists would be least likely to include: (a) Arthur Cecil Pigou.
(b) John Rogers Commons. (c) Wesley Clair Mitchell. (d) Thorstein Bunde Veblen.
100. Which of the following is not one of the four basic transactions found in an
economy as described by John Commons: (a) managerial transactions. (b) rationing
transactions. (c) bargaining transactions. (d) exchange transactions.

101. A list of prominent American institutionalists would not include: (a) John
Kenneth Galbraith. (b) John Commons. (c) Thorstein Veblen. (d) Edwin Hastings
Chamberlin. (e) Clarence Ayres.

102. Materialistic accumulation and consumption were most central to the goals of:
(a) Socrates, Plato, and Aristotle. (b) Abu Hamid al-Ghazali, Ibn Khaldun, and other
early Islamic thinkers. (c) Albertus Magnus, Thomas Aquinas, and other medieval
scholastics. (d) Gautama Buddha, Mohandas Gandhi, and E.F. Schumacher. (e) Jay
Gould, Jim Fisk, Cornelius Vanderbilt, and other “robber barons” whose activities were
described by, among others, Thorstein Veblen.

103. In the early 2000s, many stockholders and resource suppliers to such firms as
Enron and Global Crossing became victims of a phenomenon that John Kenneth
Galbraith characterized as: (a) the iron law of wages. (b) corporate downsizing. (c)
bezzle. (d) monopolistic competition. (e) the iron law of oligarchy.

104. Rolex watches, Harley Davidson motorcycles, ostentatious bling, full-sleeve

tattoos, and custom-tailored suits and ties are all reasonably good examples of: (a)
bandwagon goods. (b) positional goods. (c) institutional goods. (d) Veblen goods. (e)
inferior goods.

105. After the collapse of the Soviet Union in the late 1980s, Jeffrey Sachs advised
several former Soviet satellites to rapidly privatize former state enterprises. The results
were often catastrophic. Consequently, Sachs began to consider cultural and
sociological forces when designing recommendations for development in less
developed nations. This approach relies heavily on notions that once characterized: (a)
socioeconomics. (b) sociobiology. (c) institutionalism. (d) ethnocentrism. (e) fiscal
anthropology.

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