the classical school

What is one of the major tenets of the classical school?

a) Central planning of the economy

b) Government intervention in all economic activities

c) Private property and individual initiative

d) Equal distribution of wealth

What term is often used to describe classical doctrine?

a) Socialism

b) Capitalism

c) Economic liberalism

d) Feudalism

According to the classical school, what should be the extent of government involvement in the
economy?

a) Extensive government intervention

b) Minimal government interference

c) Complete government control

d) Government ownership of all industries

What is considered to be the best government according to the classical school?

a) A government that governs the most

b) A government that governs the least

c) A government that controls all economic activities

d) A government that provides equal wealth distribution

According to the classical school, what role does the free market play in the economy?

a) It should be abolished in favor of central planning

b) It should guide production, exchange, and distribution

c) It should be controlled by the government

d) It should be limited to certain industries only

Which of the following is a characteristic of self-interested economic behavior according to the classical
school?

a) Altruistic motives in economic transactions

b) Desire to make profits

c) Equal distribution of wages

d) Exclusive focus on social welfare

According to the classical school, how do individuals serve the best interests of society?

a) By pursuing their own individual interests

b) By sacrificing their self-interest for the greater good

c) By conforming to government regulations

d) By engaging in charitable activities

What did the classical school emphasize regarding economic resources and activities?

a) Only labor and capital contribute to a nation's wealth

b) Only agriculture and production are important economic activities

c) All economic resources and activities contribute to a nation's wealth

d) Only international exchange is beneficial for a nation's economy

What did the classical school contribute to economics?

a) Emphasis on government control of the economy

b) Focus on the importance of monopolies in the market

c) Development of explicit economic theories or "laws"

d) Promotion of income redistribution policies

What is an example of an economic law developed by the classical school?

a) The law of supply and demand

b) The law of perfect competition

c) The law of government intervention

d) The law of wealth redistribution

Whom did the classical school seek to benefit in the long run?

a) Only owners of capital and businessmen

b) Only government officials and bureaucrats

c) All members of society

d) Only the working class

How did classical economics benefit merchants and industrialists?

a) By promoting income redistribution policies

b) By ensuring government subsidies for their businesses

c) By giving them a new status and dignity as wealth promoters

d) By advocating for government control of the economy

Who bore the heaviest share of costs according to classical economics?

a) Owners of capital and businessmen

b) Government officials and bureaucrats

c) Wage earners and workers

d) Consumers and investors

How did classical economics ultimately benefit workers?

a) By providing them with high-paying jobs from the start

b) By ensuring equal wealth distribution among all workers

c) By enabling workers to enhance their own position over time

d) By reducing their working hours and increasing their pay immediately

How did classical economics justify the overthrow of mercantilist restrictions?

a) By advocating for even stricter regulations on trade

b) By emphasizing the importance of government control of the economy

c) By promoting the idea of competition and free trade

d) By advocating for a return to feudalism

What was the view of classical economics regarding government intervention?

a) Governments should be heavily involved in all economic activities

b) Governments should only focus on national defense

c) Governments should enforce property rights and provide public education

d) Governments should control all aspects of the economy

According to the classical school, what was the role of the free market in achieving economic growth?

a) The free market was unnecessary and hindered economic growth

b) The free market was the key driver of economic growth

c) The free market needed strict government regulation to function properly

d) The free market only benefited owners of capital and businessmen

What historical context does the termliberalism should be considered in?

a) Feudalism and serfdom

b) Mercantilist restrictions

c) Socialism and communism

d) Monarchy and aristocracy

What did classical economics promote in terms of trade and labor force?

a) Restricting international trade and promoting rural labor force

b) Promoting freer international trade and urban labor force

c) Limiting both international trade and labor force

d) Controlling all aspects of trade and labor force

What was the prevailing view of governments during the time of classical economics?

a) Governments were efficient and effective in managing the economy

b) Governments were corrupt and wasteful, requiring minimal intervention

c) Governments should control all economic activities for optimal results

d) Governments should redistribute wealth equally among all citizens

David Hume’s
What was David Hume's occupation?

a) Philosopher

b) Economist

c) Politician

d) Scientist

Where did David Hume study?

a) University of Edinburgh

b) University of Oxford

c) University of Cambridge

d) University of Glasgow

Which of Hume's works is considered his most famous philosophical work?

a) A Treatise of Human Nature

b) Political Discourses

c) An Enquiry Concerning Human Understanding

d) Dialogues Concerning Natural Religion

What is the Price Specie-Flow Mechanism?

a) The relationship between price and quantity of money

b) The effect of changes in the stock of money on the real economy

c) The role of money as the oil that makes the economic wheel turn
d) The process by which changes in the domestic quantity of money affect international trade and the
balance of payments

According to Hume, what is the essential role of money in the economy?

a) Money is the primary driver of economic growth

b) Money is a tool for wealth accumulation

c) Money is the medium of exchange that facilitates transactions

d) Money is a measure of value in the economy

In the short run, what are the real economic effects of changes in the quantity of money?

a) Changes in the quantity of money have no real economic consequences

b) Increases in the quantity of money stimulate economic activity

c) Decreases in the quantity of money lead to a contraction in the economy

d) Changes in the quantity of money have complex effects on the economy during the adjustment
process

What happens in the Price Specie-Flow Mechanism when the domestic quantity of money increases?

a) The domestic price level decreases, and the foreign price level increases

b) The domestic price level increases, and the foreign price level decreases

c) Both the domestic and foreign price levels increase

d) Both the domestic and foreign price levels decrease

What is the consequence of an increase in the domestic price level in the Price Specie-Flow Mechanism?

a) The domestic country experiences a trade surplus

b) The domestic country experiences a trade deficit

c) The domestic country's goods become more competitive abroad

d) The domestic country's goods become less competitive abroad

How is a deficit in the balance of trade (BOT) financed in the Price Specie-Flow Mechanism?
a) Through an inflow of gold

b) Through an outflow of gold

c) Through foreign borrowing

d) Through increased domestic production

What happens to the quantity of money in the home country and the foreign country in the Price Specie-
Flow Mechanism?

a) The quantity of money increases in both countries

b) The quantity of money decreases in both countries

c) The quantity of money increases in the home country and decreases in the foreign country

d) The quantity of money decreases in the home country and increases in the foreign country

When does the Price Specie-Flow Mechanism reach equilibrium?

a) When prices in the two nations are once again the same

b) When the domestic country achieves a trade surplus

c) When the foreign country achieves a trade deficit

d) When the quantity of money in both countries stabilizes

How does Hume describe the relationship between price and the quantity of money in the long run?

a) Prices are proportional to the quantity of money

b) Prices have no relationship with the quantity of money

c) Prices are inversely proportional to the quantity of money

d) Prices fluctuate independently of the quantity of money

What term does Hume use to describe money's role in the economy?

a) Economic catalyst

b) Economic lubricant

c) Economic fuel

d) Economic necessity
According to Hume, what are the economic consequences of changes in the quantity of money in the
long run?

a) Significant changes in the real economy

b) Minor adjustments in the real economy

c) No real economic consequences

d) Unpredictable economic outcomes

What was the reason for David Hume being twice refused a chair in philosophy at Edinburgh?

a) His skeptical spirit and unorthodox thinking

b) Lack of qualifications

c) Political disagreements

d) Personal conflicts with other philosophers

What is David Hume's most well-known philosophical work?

a) A Treatise of Human Nature

b) Political Discourses

c) An Enquiry Concerning Human Understanding

d) Dialogues Concerning Natural Religion

Answer: a) A Treatise of Human Nature

Why was David Hume twice refused a chair in philosophy at Edinburgh?

a) Lack of formal education

b) Unorthodox thinking

c) Inadequate writing skills

d) Lack of experience in academia

Answer: b) Unorthodox thinking

When was David Hume born?

a) 1701

b) 1711

c) 1721

d) 1731

Answer: b) 1711

What was Hume's contribution as an economist?

a) Development of the quantity theory of money

b) Introduction of the concept of opportunity cost

c) Formulation of the law of supply and demand

d) Presentation of the price specie-flow mechanism

Answer: d) Presentation of the price specie-flow mechanism

According to Hume, what is the essential role of money?

a) Determining the level of economic output

b) Regulating inflation and deflation

c) Facilitating economic transactions

d) Controlling interest rates

Answer: c) Facilitating economic transactions

In the short run, what are the real economic effects of a change in the quantity of money?

a) Changes in the level of employment

b) Changes in the level of investment

c) Changes in the level of economic growth

d) Changes in economic activity and prices

Answer: d) Changes in economic activity and prices

According to the price specie-flow mechanism, what happens when the domestic quantity of money
increases?
a) The domestic price level increases, and the foreign price level decreases

b) The domestic price level decreases, and the foreign price level increases

c) The domestic price level and the foreign price level remain the same

d) The domestic price level and the foreign price level fluctuate randomly

Answer: a) The domestic price level increases, and the foreign price level decreases

How is a deficit in the balance of trade (BOT) financed in the price specie-flow mechanism?

a) Through an inflow of gold

b) Through an outflow of gold

c) Through an increase in government spending

d) Through a decrease in government spending

Answer: b) Through an outflow of gold

What happens to the quantity of money in the home country when it experiences a deficit in the balance
of trade?

a) It increases

b) It decreases

c) It remains the same

d) It fluctuates randomly

Answer: b) It decreases

What is the ultimate outcome of the price specie-flow mechanism?

a) Prices in the two nations become equal

b) Prices in the two nations become inversely proportional

c) Prices in the two nations fluctuate randomly

d) Prices in the two nations remain unchanged

Answer: a) Prices in the two nations become equal

Which country experiences an increase in the quantity of money in the price specie-flow mechanism?
a) Domestic (D) country

b) Foreign (F) country

c) Both countries experience an increase

d) Neither country experiences an increase

Answer: b) Foreign (F) country

What is the relationship between the quantity of money and the price level according to Hume?

a) Proportional

b) Inversely proportional

c) Unrelated

d) Randomly fluctuating

Answer: a) Proportional

What is the essential role of money in the economic machinery of society, according to Hume?

a) Driving economic growth

b) Facilitating trade and transactions

c) Regulating income distribution

d) Controlling inflation and deflation

Answer: b) Facilitating trade and transactions

What is the long-run perspective on the relationship between price and quantity of money?

a) Complex and unpredictable

b) Direct and immediate

c) Inversely proportional

d) Constant and unchanging

Answer: d) Constant and unchanging

Which country experiences a trade deficit in the price specie-flow mechanism?

a) Domestic (D) country

b) Foreign (F) country

c) Both countries experience a trade deficit

d) Neither country experiences a trade deficit

Answer: a) Domestic (D) country

Adam smiz
Where was Adam Smith born?

A. England

B. Scotland

C. Ireland

D. Wales

What was the title of Smith's first major work?

A. The Wealth of Nations

B. The Theory of Moral Sentiments

C. An Inquiry into the Nature and Causes of the Wealth of Nations

D. Principles of Economics

According to Smith, what is the real measure of the exchangeable value of all commodities?

A. Utility

B. Gold

C. Labor

D. Supply and demand

What does Smith argue leads to increasing division of labor?

A. Specialization of tasks

B. Money

C. Needs and wants of consumers

D. Trade
According to Smith, what are the three benefits of the division of labor?

A. Increased worker satisfaction, better quality, lower prices

B. Increased dexterity of workers, saving of time, invention of machinery

C. More workers employed, higher productivity, economies of scale

D. Supply, demand, competition

What does Smith argue the role and purpose of government should be limited to?

A. Enforcing contracts, protecting private property, national defense

B. Regulating markets, managing the economy

C. Redistribution of wealth, welfare state programs

D. All of the above

In the Wealth of Nations, what does Smith argue determines the value of a good?

A. How much labor was required to produce it

B. Its price on the market

C. Its marginal utility

D. All of the above

What is the "natural price" according to Smith?

A. The long-run equilibrium price

B. The price set by market demand

C. The price that covers costs of production

D. Whatever price the market will bear

What is the "paradox of value" used by Smith?

A. Water is more useful than diamonds but diamonds are more valuable

B. Land has value but is not produced

C. Labor has no value but creates all value

D. Supply and demand determines prices

What book presented Smith's moral philosophy?

A. An Inquiry into the Nature and Causes of the Wealth of Nations

B. The Theory of Moral Sentiments

C. On the Wealth of Nations

D. Lectures on Jurisprudence

Which of Smith's works was published first?

A. The Theory of Moral Sentiments

B. The Wealth of Nations

C. Lectures on Jurisprudence

D. Essays on Philosophical Subjects

In what year was Smith's The Wealth of Nations published?

A. 1776

B. 1848

C. 1910

D. 1973

What does Smith consider the primary factors of production?

A. Land, labor, capital, entrepreneurship

B. Land, labor, machinery

C. Natural resources, human capital, financial capital

D. Land, labor

What did Smith argue leads to greater division of labor?

A. Specialization of tasks

B. Trade
C. Needs and wants of consumers

D. Technological progress

According to Smith, what aspect of markets did he help establish as a field of economic analysis?

A. Competition

B. Labor economics

C. Growth theory

D. International trade

What was Smith's famous metaphor for how self-interested behaviors can benefit society?

A. The invisible hand

B. Say's Law

C. The optimization problem

D. Pareto optimality

What does Smith argue determines the relative wages across different jobs?

A. Supply and demand for different job skills

B. Productivity differentials

C. Compensating differentials for difficulties, risks, etc.

D. Minimum wage legislation

According to Smith, what determines aggregate wages at a national level?

A. Profits

B. Productivity

C. Size of the "wage fund"

D. Price level

What role does money play in Smith's models?

A. A unit of account and means of exchange

B. A store of value

C. A veil over the real economy

D. All of the above

In which Scottish city did Smith serve as a professor?

A. Edinburgh

B. Aberdeen

C. Glasgow

D. St. Andrews

What did Smith consider the three major components of price?

A. Wages, rents, interest rates

B. Costs of materials, wages, profits

C. Supply, demand, competition

D. Wages, profits, rent

According to Smith, what determines interest rates and profits?

A. Risk and time preference

B. Aggregate demand

C. Central bank policy

D. Government regulation

What did Smith argue will cause profits to fall over time?

A. Capital accumulation and competition

B. Higher wages

C. Increased taxation

D. Declining population growth

Which economic system did Smith primarily critique in The Wealth of Nations?
A. Capitalism

B. Socialism

C. Mercantilism

D. Feudalism

What does Smith argue leads to rents and the value of land?

A. Natural advantages of location, soil quality, climate

B. Monopoly control of scarce resources

C. Housing demand according to urban areas

D. All of the above

Which of the following does Smith argue are unproductive labor?

A. Teachers, doctors

B. Retail workers

C. Factory workers, farmers

D. Soldiers, managers

What did Smith contend does NOT create value according to his theory of labor?

A. Capital goods

B. Natural resources

C. Labor

D. Entrepreneurship

What did Smith consider productive labor as productive of?

A. Services

B. Wages

C. Capital, which can be accumulated used to enlarge the wealth of the nation

D. Goods
According to Smith, what determines aggregate wages at a national level?

A. Profits

B. Productivity

C. Size of the "wage fund"

D. Price level

What is the "wage fund theory" proposed by Smith?

A. Wages are determined by worker productivity

B. Wages depend on profits and capital investment

C. Wages equal the value of a worker's marginal product

D. Unions determine wages

What is the "theory of moral sentiments" according to Smith?

A. Self-interest and competition benefit society

B. Sympathy and self-restraint benefit society

C. Government intervention benefits society

D. Free markets without regulation benefit society

Who was Smith's favorite teacher?

A. John Locke

B. Francis Hutcheson

C. David Hume

D. Immanuel Kant

In which Scottish city did Smith serve as a professor?

A. Edinburgh

B. Aberdeen

C. Glasgow

D. St. Andrews
Adam Smith argued that long-run price was determined by:

A. Aggregate demand

B. Supply and demand

C. Costs of production

D. Market forces

Which of the following would Adam Smith argue leads to greater economic prosperity according to his
theories?

A. Free international trade

B. Specialization and division of labor

C. Limited government intervention

D. All of the above

C
A

Ricardo
According to Ricardo, the principal purpose of economics is to determine the:

A) Causes of business cycles

B) Gross domestic product of countries

C) Laws that regulate the distribution of income

D) Effects of fiscal and monetary policy

Ricardo was primarily concerned with the effects of changes in income distribution on:

A) Consumption patterns

B) Trade balances

C) The rate of capital accumulation and economic growth

D) Unemployment levels

According to Ricardo, which of the following does NOT determine the value of a commodity?

A) Its scarcity

B) The quantity of labor required to produce it

C) Its use value

D) The demand for the commodity

Ricardo defined rent as:

A) The return to land

B) The return to capital

C) Wages paid to workers

D) Corporate profits

According to Ricardo, rent arises from:

A) Superior business skills of entrepreneurs

B) The extensive and intensive margins of cultivation

C) Interest payments on loans

D) Capital gains from asset price increases

Ricardo's "law of diminishing returns" refers to:

A) The tendency for average productivity to fall with added units of variable input

B) Interest rates falling over the business cycle

C) The self-correcting forces in product markets

D) Wages falling as labor supply increases

In Ricardo's model, rent is determined by:

A) Land prices

B) Yields on marginal land

C) Capital invested in land

D) Opportunity costs of landowners

Which of the following would cause rent to increase according to Ricardo?

A) A decline in grain prices

B) An improvement in agricultural technology

C) An increase in the money supply

D) Population growth

According to Ricardo, rent arises at both:

A) Marginal costs of production

B) The extensive and intensive margins of cultivation

C) Average revenue and average cost

D) Supply and demand equilibrium

For Ricardo, which of the following would increase over time as population grows?

A) Real wages

B) Profit rates

C) Rents

D) All of the above

In Ricardo's model, the natural price of labor refers to:

A) The market-clearing wage rate

B) The subsistence wage

C) The wage set by labor unions

D) The wage determined by productivity

According to the "iron law of wages" in Ricardo's model:

A) Wages would be pushed upwards by labor unions

B) Wages would steadily rise with labor productivity

C) Workers would receive just a subsistence wage

D) Wages would equal the value of productivity

Ricardo argued that higher wages must come out of:

A)Prices

B)Profits

C)Government spending

D)Inflation

According to Ricardo, if wages fall:

A) Profit rates will rise

B) Prices will also fall

C) Output will decline

D) Unemployment will increase

For Ricardo, which group would be the primary beneficiary of long-run economic growth?

A) Workers

B) Capitalists

C) Landlords

D) Entrepreneurs

Ricardo strongly opposed the English Corn Laws because they:

A) Hurt agricultural exports

B) Increased government spending

C) Raised food prices and rents

D) Lowered wages

Ricardo concluded that a tax on rent would:

A) Be wholly shifted to consumers

B) Lower capital investment

C) Raise agricultural output

D) Only affect landlords

According to Ricardo, in the long-run:

A) Profit rates would rise as technology improved

B) Real wages would fall to subsistence levels

C) The economy would reach a steady state of growth

D) Rents would decline significantly

Ricardo argued that the natural rate of wages is determined by:

A) Market forces of supply and demand

B) Pay scales in competitive industries

C) The actual costs of worker subsistence

D) Minimum wage laws

In Ricardo's theory, which occupational group bears the burden of short-run wage increases above the
natural wage level?

A) Landlords

B) Capitalists

C) Workers

D) Government

Ricardo thought that falling profit rates would eventually:

A) Raise real wages

B) Increase capital accumulation

C) Reduce economic growth

D) Shift income to landlords

For Ricardo, profits between industries tend to:

A) Diverge significantly over time

B) Equalize due to competitive forces

C) Depend on each industry's capital intensity

D) Be determined by average productivity levels

According to the Ricardian model of distribution:

A) Real wages will steadily increase over the long run

B) Profits depend primarily on demand conditions

C) Rents are determined by land prices and interest rates

D) The factors of production share national income in fixed proportions

For Ricardo, international trade was motivated primarily by:

A) Differences in labor productivity between countries

B) Tariff and non-tariff barriers imposed by governments

C) Transportation costs for moving goods globally

D) Variations in capital abundance across nations

Ricardo's theory of comparative advantage demonstrated that:

A) Free trade increases overall economic welfare

B) Export industries should receive government subsidies

C) Trade deficits are always beneficial for an economy

D) Non-traded sectors can become uncompetitive under free trade

According to Ricardo, long-run changes in relative prices are caused by changes in:

A) Demand conditions in product markets

B) The natural rates of technological progress across industries

C) Inflation and the domestic money supply

D) Underlying production costs and techniques

Ricardo believed that prices deviate from values in the:

A) Short-run due to market imperfections

B) Long-run as technology revolutionizes industries

C) Short-run due to supply and demand fluctuations

D) Long-run as costs of production change slowly

Ricardo defined economic rent as the difference between:

A) Returns from capital and returns from labor

B) Price and minimum average total cost

C) Revenue and explicit production costs

D) Agricultural productivity and landlords' opportunity costs

According to Ricardo's theory, workers' real wages are determined by the:

A) Productivity of labor

B) Demand for labor

C) Cost of living

D) Supply of labor

For Ricardo, changes in wages impacted the distribution of income between:

A) Capitalists and workers

B) Landowners and capitalists

C) Landowners and workers

D) Government and consumers

Ricardo argued that the corn laws should be abolished because they:

A) Raised food prices

B) Increased unemployment

C) Lowered agricultural productivity

D) Reduced tax revenues

According to Ricardo, economies tend to gravitate towards a:

A) Continuously expanding output

B) Steady-state of zero growth

C) Self-sustaining economic boom

D) Perpetual inflationary spiral

Ricardo used the concept of "economic rent" to refer to the:

A) Wages of unskilled workers

B) Interest payments on loans

C) Profits earned in competitive industries

D) Income received by landlords

For Ricardo, the natural price of a commodity is determined by:

A) Its market price

B) Total product curves

C) The wage good model

D) The quantity of labor needed for its production

Ricardo argued that profits would equalize across industries due to:

A) The impact of new technologies

B) Labor mobility and arbitrage activities

C) International factor price equalization

D) Government industrial policies

According to Ricardo, what factor would cause prices to deviate from labor values in the short-run?

A) Supply and demand fluctuations

B) Accumulation of fixed capital assets

C) Changes in productivity over business cycles

D) Entry and exit of firms from industries

According to Ricardo, rents would be unaffected by a tax on land rent because:

A) It could be passed entirely to consumers

B) It would not alter the relative yields of land

C) It would encourage more intensive cultivation

D) Land productivity would decline in response

For Ricardo, the long-run tendency of real wages was to:

A) Rise with productivity due to demand-side effects

B) Fluctuate around the value of output per worker

C) Remain at subsistence levels

D) Decline due to increasing poverty

An implication of Ricardo's theory of rent was that:

A) Land reform could raise living standards

B) Taxing land would be an efficient revenue source

C) Land values depended on agricultural tariffs

D) Rents varied directly with farm output prices

Ricardo saw conflict primarily between:

A) Workers and capitalists

B) Landowners and the rest of society

C) Export

C - Laws that regulate the distribution of income

C - The rate of capital accumulation and economic growth

D - The demand for the commodity

A - The return to land

B - The extensive and intensive margins of cultivation

A - The tendency for average productivity to fall with added units of variable input

B - Yields on marginal land

D - Population growth

B - The extensive and intensive margins of cultivation

C - Rents

B - The subsistence wage

C - Workers would receive just a subsistence wage

B - Profits

A - Profit rates will rise

B - Capitalists

C - Raised food prices and rents

D - Only affect landlords

B - Real wages would fall to subsistence levels

C - The actual costs of worker subsistence

B - Capitalists

C - Reduce economic growth

B - Equalize due to competitive forces

D - The factors of production share national income in fixed proportions

A - Differences in labor productivity between countries

A - Free trade increases overall economic welfare

D - Underlying production costs and techniques

C - Short-run due to supply and demand fluctuations

D - Agricultural productivity and landlords' opportunity costs

C - Cost of living

A - Capitalists and workers

A - Raised food prices

B - Steady-state of zero growth

D - Income received by landlords

D - The quantity of labor needed for its production

B - Labor mobility and arbitrage activities

A - Supply and demand fluctuations

B - It would not alter the relative yields of land

C - Remain at subsistence levels

B - Taxing land would be an efficient revenue source

B - Landowners and the rest of society

Which of the following best describes Malthus' view on poverty?

A) Poverty is the natural punishment for overpopulation

B) Poverty is caused by lack of investment in human capital

C) Poverty has no single cause and requires a multi-pronged solution

D) Poverty is primarily a result of unequal distribution of resources

According to Malthus, population growth follows what pattern?

A) Arithmetical

B) Geometric

C) Logarithmic

D) Exponential

Which of the following was NOT one of Malthus' proposed checks on population?

A) Famine

B) War
C) Immigration

D) Pestilence

Ricardo developed his labor theory of value in response to:

A) Adam Smith's classical theory of value

B) Malthus' principle of population

C) Physiocratic doctrine of laissez-faire

D) The classical method of abstraction and deductive reasoning

According to Ricardo, what is the primary purpose of economics?

A) To understand market forces and economic growth

B) To determine the laws regulating distribution of income

C) To prescribe optimal public policy solutions

D) To analyze different economic systems and histories

Ricardo believed the labor theory of value applied to:

A) Non-reproducible commodities only

B) Reproducible commodities produced under competition

C) Services but not tangible goods

D) All commodities in all economies

According to Ricardo, what ultimately determines the value of a commodity?

A) Utility

B) Marginal utility

C) Scarcity

D) Quantity of labor required for its production

Ricardo identified what type of rent in addition to differential rent?

A) Intramarginal rent
B) Inframarginal rent

C) Extensive margin rent

D) Intensive margin rent

According to Ricardo, what causes rent to arise at the extensive margin?

A) Declining marginal returns to successive units of labor and capital

B) Inequality of land quality and increasing cultivation of poorer soils

C) Scarcity of land combined with land monopoly power

D) Interpersonal utility differences among land parcels

What is Ricardo's theory of rent based on?

A) The law of diminishing returns in agriculture

B) Landlords' monopoly pricing power

C) Differences in land quality and location

D) All of the above

In Ricardo's theory, what determines the natural price of labor?

A) Supply and demand for labor

B) Cost of living and needs of workers' families

C) Average productivity of labor

D) Wages set by labor unions or government

According to Ricardo, what causes wages and profits to vary inversely over time?

A) Changes in prices of manufactured goods

B) Fluctuations in supply and demand for labor

C) The equation of international trade

D) Technological improvements in agriculture

Ricardo believed long-run wage rates would:

A) Rise steadily with productivity increases

B) Remain flexible and market-determined

C) Stay at a biologically determined subsistence level

D) Vary significantly between occupations

Ricardo was primarily concerned with analyzing laws regulating:

A) Economic growth and living standards

B) National income and its functional distribution

C) Macroeconomic policy tools like taxation

D) Microeconomic market behavior and outcomes

According to Ricardo, which economic class benefits most from long-run economic growth?

A) Workers

B) Capitalists

C) Landlords

D) Consumers

Ricardo disagreed with Malthus' view that the poor laws should:

A) Be expanded to provide relief for the unemployed

B) Only provide workhouses without relief for the destitute

C) Not redistribute income through the welfare state

D) Tax the wealthy to fund public works programs

According to Ricardo, what would happen if the price of grain (corn) fell?

A) Rents would rise and production would expand

B) Profits would rise and capital accumulation would increase

C) Real wages would rise and living standards increase

D) All of the above

Which of the following would NOT raise agricultural rents according to Ricardo?

A) Population growth

B) Tariffs on grain imports

C) Technological innovations in farming

D) Higher prices for farm outputs

Ricardo opposed which set of laws protecting British landowners?

A) Enclosure acts

B) Poor laws

C) Factory acts

D) Corn laws

According to Ricardo, a tax on what would not reduce production or raise consumer prices?

A) Wages

B) Profits

C) Exports

D) Rent

What theory did Ricardo develop to explain diminishing returns in agriculture?

A) Law of increasing opportunity costs

B) Principle of substitution

C) Law of diminishing marginal productivity

D) Theory of comparative advantage

In Ricardo's theory, what causes the rate of profit to fall over the long run?

A) Technical progress

B) Increasing capital accumulation

C) Rising real wages

D) Increasing commodity prices

According to Ricardo, what ultimately limits economic growth?

A) Shortages of natural resources

B) Underconsumption

C) Diminishing agricultural returns

D) Environmental degradation

Who influenced Malthus' thinking with their optimistic view of progress?

A) Adam Smith and Thomas Robert Malthus

B) William Godwin and Marquis de Condorcet

C) Thomas Hobbes and John Locke

D) Jean-Jacques Rousseau and Edmund Burke

Which of the following best describes Malthus' view on poverty relief?

A) It should be expanded to help the poor

B) It should only provide workhouses without relief

C) It can help in emergencies but risks making the problem worse

D) The poor laws are unnecessary and distort the labor market

Which of the following ideas did Malthus directly challenge?

A) Physiocratic doctrine of laissez-faire

B) Godwin and Condorcet's perfectibility theories

C) Ricardo's labor theory of value

D) Say's Law of markets

What was one of the major controversies that attracted Malthus' attention during his time?

A) Rising rents from agricultural enclosure acts

B) Mercantilist trade regulations and tariffs

C) Increasing poverty and debates over poor relief

D) Deindustrialization from technological automation

According to Malthus, what determines the natural price of labor?

A) Supply and demand for different skills

B) Cost of living needs for laborers and dependents

C) Average wages paid to workers in different sectors

D) Union-negotiated wage contracts and minimum wages

Which economist formulated the philosophy of anarchism and opposed the state and collective action?

A) Jean-Jacques Rousseau

B) William Godwin

C) Adam Smith

D) Karl Marx

Who believed human perfectibility could be achieved through a rational and egalitarian social order
without limits to population growth?

A) William Godwin

B) David Ricardo

C) Thomas Malthus

D) Marquis de Condorcet

What was Ricardo's primary occupation before he became interested in economics?

A) University professor

B) Civil servant

C) Stockbroker and investor

D) Clergyman

Which economist assumed workers receive subsistence level wages necessary only to sustain the
population?
A) Adam Smith

B) David Ricardo

C) Karl Marx

D) Thomas Malthus

According to Ricardo, what determines the natural price of labor?

A) Supply and demand for different job skills

B) Living costs needed to sustain worker productivity

C) Average wages paid in different economic sectors

D) Union wage contracts and government minimum wages

In Ricardo's theory of distribution, what must nominal wages rise to keep pace with?

A) Profits

B) Increased agricultural productivity

C) Rents

D) Rising cost of living

What conclusion did Ricardo draw from his distribution theory about taxes on rent?

A) They could be shifted to workers through decreased wages

B) They would lower farm output and food prices

C) They would only impact landlords and encourage cultivation

D) They may discourage agricultural improvements

D
B