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Unformatted text preview: Economics 107 Midterm Examination Pagel ,, _-.;,w_' _ February 14, 2005 r" {This exam has 9 pages]. 1. WARNING: If you make an erasure on your Scantron, you run the risk that the optical scanner - which is very sensitive - will score your answer incorrectly. For obvious reasons, the optical scanner‘s grading will be taken as final. So don't make erasures. [lIint: score your answers on this examination , and then transfer them to your Scantron SSE-ES [or E] when you have completed at] your work.] 2. li'you have spoiled a Scantron, there are a few ones available in the room for 25 cents. 3. Keep your examination and check your answers which will be posted on the Website after class. I. An economic system is a system of human behavior that resolves the four problems of 1] what to produce, of 2} how to produce what is produced, at 3] when to produce what is produced, and of 4} who gets Iwhat of what has been produced. While Leone-mic systems have been around for milennia, they 1Were first identified as such by: 3- Aristotle. .. J}. St. Thomas Acquinas. “e. Sir Thomas Mun. d. Thomas Hobbes. 5 {$1411 awesome.- 2. The first eeonomies paradigm, according to Joseph Schumpeter [and Prof M.[ was produced by: a. Kantilva. h. Gnan Zhung. c. Illn Khaldun. d. Xenophon. W 3. River valley civilizations started emerging ahoul fifllil] years ago in I'l-‘lesupntarnia, But apparently it took until the life time of the following persons Jaruunll dill} Iii-Jill before we get analytical thinking about economic issues [although such. thinking was not identifed as “economic” thinking at the lime, or course. f: 1.x.‘tristotie, Kantilya, and the followers of Guan Zhong. I b. Chenggis and Kubilai Khan. c. ain'errdcli and lhn Khaldnn. d. Diogenes of Sinope and Zeno of Citium. e. All of the above. 4. Professor Murphy argued that we should not be surprised that followers ol‘ Guam Zhong authored some uscfnlc analysis of What we new call “economic issues“ in T" century B.t'.'. Qi because: a. lChina has always been intellectually more advanced that comparable civilizations. b. Q1 had recently eonquered all DI" China and brought wise men from all over the globe to decide how to run this giant empire. e. as Karl “'itt‘logel has pointed out it! «Oriental Bespotism, Gnan Zhong was Master of the Emperor's Walerworks and had to think about how to allocate water to the whole oI'Qi. d: after the introduction of settled agrielllture and the domestication of animals, more complex societies and economic systems emerged in the great river valleys of Peru and at the ‘r'ang 'l‘se, 1|fellow liti'lr'er1 Nile, Indus, Tigris and Euphrates. Eventually someone would attempt to analyze this increased complexity. e. All oi the above. .toman jns gentiunt [law of nations] emerged; page 2 .se as the Roman empire expanded Roman legalists faced the problem of harmonizing a large number of sagai systems of many con uered ‘ s. eeause the Roman governmental structure favored this. A. praetnr urbanus Iwas responsible [or regularly codilying the laws by which foreigners would he governed. Wk.- 5 .2 because a community of iurisprudentgs - or legal scholars grew up who advised the Senate andtor the Emperor and “"1 'e'I this community institutionalized the thinking about decisions coming out of the growing code of laws. J was.) “arise of the above. _. a e. None of the above. " ' 15. [liver time ancient economies greur more complex as theyr developed economically and as their foreign trade grew, but exactly hon:I complex theyr were has been I. matter ol‘considerabie debate. Some ot‘ the positions of schoiars who Iwere involved in the debate went: 15‘s“ If: a. Greek economic tile was giggle and small—scale. lt 1was largely based on the ethos. b. eennemie life of the fifth century BIT. was a complex as the European sixteenth century. e. economic life was never indeEndent - production and exchange was embedded in other institutions and attitudes. fdfihll of the above. e. None ot' the above. 'T. Baekhouse contends that the 12 century Renaissance (Le. a rising demand fortearning} was a consequence, L) H t" perhaps, of: a. rising prosperity. h. conflicts between emerging powers {notably Church and State]. c. the loosening of the feudal system and the emergence of a middle class. :1. Prof M. says we also Wgate whet-Ferihe rising prosperity was due to a major decrease in transport costs due to advances in marine technology. More prosperity would certainly permit the endowment olthe new institutions oflearltlng as well as presenting problems to the scholastics as to whether the source of new wealth was sinful or not" will of the above. eter Ahelard and Thomas of Cho‘nham. [in stem Magnus and Thomas AEEL c. William of Aurerre and Aristotle. d. Nicole Uresme and Jean Le lion. e. None of the above. ydecortling to Backllouie the major figures in scholastic economies are: P i I . l- _ _r't'o.-r.1I'L-r J 9. Aeeording to Backllouse the break up ofthe medieval order led to slgnificant shifts in the economic balance of Europe. a. Independent city states declined. b. Capital cities like London grew most rapidly. e. Other cities even declined-me. for example, declined in importance relative to London. Paris and An'isterdam. d. Countries bordering on the North Sea enjoyed increased prosperity while the Mediterranean declined. {All oftltc above. '— iifi't’a'r --. It}. Pro’l M. said that Machiavelli is similar to Malthus and Mars. because: a. all people whose names begin with M are malcontents. [This is known as Murphy‘s Law.] ' ' .. ~ I: all three had rebellious personalities. ’5/They are remembered more for their hold arguments than for their more subtle and nuanced arguments. Machiavelli actually did not discard all moral standards in judging political behavior in favor of “Machiavellian” Inote how a misconception about his thought has got into our languagei behavior despite what he said in it Principe. d. All of the above. e. None of the above- l [. The Balance of Payments balances overali because: a. double entry bookkeeping is used. b. hecause governments fudge statistics to make them balance. Even Iwith perfect statistics they wouldn't balance overalL c. demand necfisarily equals suppiy. /d:/persons and governments cannot buy foreign products and make gifts to foreigners and make foreign investments unless they earn, borrow or are given the necessary foreign currency to an that. e. None of the above. Page 3 12.. The distinction between current transactions and capital transactions in the Balance of Payments depends on: a. "whether a particular transaction involves an Lilli. Etransfer of ownership] or not. “b. whether a particular transaction wilt occur this year or sent year. c. whether a particular transaction is initiated by a foreigner or by the citizen of a particular country. d. whether a particular transaction is initiated by a private individual or by a corporate entity. e. all of the above. 13- One of the following is a unilateral transfer. which. one? a. Monsieur Legrange from Paris visits Disneyland and purchases a ticket. ,hfi/Madamc Lagrange sends her sister. in Whittier, $51) in Euros for Christmas. c. Madcmiselle Legrllage sends her boyfriend studying Economics Ill'l' at UCLA a copy of Paris Soir. d. The chauffeur of Monsieur Lagrange orders a spare part for the Legrange family Lexus from l|:'_'iarsot'i Toyota, in Carson, California. e. Ail ofthe above. 14. The fact that there are “flat” entries as well as “grass” entries in the Balance of Payments means that: a. governments have something to hide and are pulling the wool over our eyes. b. gross entries are clf entries |in other words carriage, insurance. and freight has been paid] whereas net entries are fob entries lit-leaning costs are only included only up to the point that a commodity has been loaded on a ship or other means of transportation] c. we are just going to have to convert net entries in PPP [purchasing Pl'ltn't er parity| prices to get to gross prices. /Jd:’for some types of traded items we shalt not know the total volume of the item traded. ' c. All of the above. I 5. Tot: own stock in Harlan and Wolff in Belfast, Northern Ireland and get a check for Sill} English pound. This is: a. an import of an [UL] and witl appear on the Capital Account as an export. b. an export of an. [GLI- and will appear on the Capital Account as an import. c. actually won’t appear on the Balance of Payments but will appear in the Northern irish Balance of Payments. ,dfzrceordcd an the American Current Account as an earning on an investment and will appear on the export side of the Balance. c. None of the above. {z Viki; If country A makes a Direct investment in Country B: karthis will show up on the capital account of lCountry A as an import. '/ "' it. this will show up on the capital account ofCountt-y A as an export. f ,ef'ihis will show up on the current account of Country A as an import. d.thls will show up on the current account of Country A as an export. c. this will not show up on the Balance of Payments otCountry B. '-|f.- ', 1'; -' _ 1?. Domestic availability [DA] is: {fa/equal to GNP + imports - exports. if a country has an import surplus1 DA is greater than GDP. b. is a met'calltiiist term for the available surplus domestically available for export. c. is it mercaatllisl term for the unempioyed available for cmpioyment in export industries.1 .2 ti. is always less than the GNP. ,1 'r’i'f' c. is always greater than the GDP. “Ii-ffut' '_- ““I' ..'-." 39.7.1 Mic oi Final-.1. I Female-a r' If Ills-Ll. :Lrllr'fg' fiwarqa pee ' u heirs: 4's he 'vtL fine tor " o Virtth fu'thott‘l' in"; ("new - Eon "r L. r _ J.“- r_ -.,._ lf'lllr1.{.|-. _r r J, _J A." iii. Some or the reasons why bullionists wanted lrtlpol'ls of gold were: Page 4 a. ram imports mode-1 “a sum or we Etihooi n nun : 34-4: t. it t. h. monarchs by owning mints could debase currencies in times of emergency. L- ndcmq [1er c. “money quickens trade". ' u t if; a; or rt. that having more gold enabled the switch from [using our language and concepts] a natural to a money economy: gill.“ ol' the above. r 19. Mun might be viewed as making Mercantillst thinking a tad more enlightened because: gym/he argued that exporting gold to India was OK as this help-ed Britain overall to have an'import surplus. “id'j'infil (1' " n. he made a strong pitch for governments to leave business to business and stop worrying about the 30?. o It; 1; 4;; "lot “ n. he argued monarchs should promote the natural liberties of all citizens of a country. I I m A Er: I. m d. he was the first person to argue for the removal of all tarifis. {Egg-hue of the above. :F‘ 76”? fie 1w" " Ear L II]. To mercantilist thinkers a Balance of Payments was u‘t'attorable"r if: a. was very small, and diminishing overtime. R . it produced an export surplus. c. it produced an Import surplus. d- it enabled the purchase of iuaury items for the rich. c. it enabled the pursuit of coolneyelical policy. dyes-ion r :5“: ti- ten—w ’r-h' Winii 9th 1:. Sir Thomas Mun influenced European thought on foreign trade for many decades. He did thlfit _.. -”_ oi: despite the fact that he was clearly involved In special pleading for the East India Company. ' - I b. by thoroughly rejecting mercantilisen. c. by introducing the first systematic use ol‘ statistics into mercantilist literature. d. by arguing that export surpluses would not last as they would disappear due to the emulation ol'other nations. _ c. none of the above. ' 22. Some persons have argued there was a Mercantilist paradigm but Prof M. argued that this does not make sense as: a. there was considerable variance in the views of Mercantilist writers. |-. J ' _I {ti 1‘“ .- I b. there was not a sulficient body of developed thinking to make mercantilist thought scientific. “'“fi If x ' ""1" My“: c. we should when discussing scientific topics, stick to definition of a paradigm that Kuhn uses. H- 5 " '- : =‘-."- FD l-"t 2"". /dfali of file above. {.3 .’-.".'~ if - tile. {Lu $3.1 " e. none of the aboyeII | ~ .:._/-_-1.-_.,-':._t_"-t .,-- 23. Nowton‘s revolution in physics had direct influence on the development ofeconomics. ~ ._ _ a. Home as a young person formed the ambition to produce a Newtonian revolution in the “moral sciences.‘ 3‘ ' T n L 11. Smith was not only deeply influenced by Home and Ilunte’s circle of friends in Edinburgh but had written about and I'- -'1r:i.tt!r.' rr'i lectured on science. He was a strong admirer of Newton. 1 L J a. e. Smith’s “natural system of llherty" in the social sphere is similar to Newton‘s system of the Universe. ..—. d. Both Home and Smith thought in terms of gravity. For Smith, market prices “gravitate” towards natural prices. For -*-' -"':l- a Home saw gold internationally finding a natural level like water. Also for Home there was a moral attraction between humans “ arising from the interests and passions of "ten" akin to the physical attraction generated by gravitational forces. .XMI of the above. Note: I'll give you this one as ofre-eirr'e. (in reviewing the questions after I typed them up. “inert this question but I dirt not go over Hume's pSfibflogICEI beliefs in cioss. anr are no: in your recs. 14. In the intellectual revolution in Europe during the seventeenth and eighteenth century, the first major successful . attack on Platonism was by: iii-1?? ‘ .a”. John Locke who argued that far from having innate ideas at birth, humans were born with a tubule rose Jempty slatei “inf.th ’ on which Nature wrote by way of our experiences, and our reflections on our experiences. 'Ph‘l'tuin. h. Spinoza who argued that the Ideal Republic was fascistic. c. Machiavelli who argued that Plato was overly concerned with ethics and economic efficiency. 11 Iill‘ttesnay who argued that Plato failed to understand the yinues of foreign trade. e. None of the above. 25. Francois Quesnay liIfiS‘tlv-ITM] was physician to Madame de Pompadon'r and 1749 and the Page 5 French King in 1755. He wrote dissertations on suppuration. gangrene and fevers. [True facts i didn‘t have time to tell you in class. So you are learning something else on this exam'.| Some commentators leg. Schumpeter! speculate because Willilm Harvey’s “STE-1657] discovery of the circulation at blood was still fresh in the European conversation [more true factsl, Quesnay was led: to see that a. healthy circulation of money throughout the whole world would prevent the disease of mercantilisrn. .étn see circulation oi‘cnmmodities and expenditures in I"L'E.tat."' [The State]. It: to invent social Security systems for the French. Harmony—3 d. to invent medical economics. CI.“ Jill-kin 1‘ all}. h T: e. none of the above. it film-11lifi: .{tl- “__I.'_-Hl_ .. 2ft. Prodnit Na was a Physiocratic nation: ll” a. and is not out of line with Aristotle‘s metaphor of productivity: an apple tree is productive - it bears an apple. Craftsmen making a table merely change the form of the materials going into the table. . . Pu ti ' ' Mt :- b. And was the surplus over costs In agncultnral production. 1 u r- t. '5 the French for Net Material Prodnct. - 1* mi of h t’- mitt Ail“ and {bl' ' 'S‘UH. nix: «Jr ~_ .' Ii}- e. all ot' the ahove. ' IT. The Physloerats believed in. a single tax, l‘impilt unique,I on landowners: _"Ph -_,_._ . , ,i. .- _afi1eiie’ving that only agriculture produced a surplus with this surplus being largely an unearned one due to the .. ___ .{ ll _. _ _ 5: 'j productivity ofNatnre. 5n the tax was a fair one. i by ' '_:_ I j“- b. heeause they were Marxist revolutionaries and wanted to over throw the landowning tlass. : I _-I . fl '. 1:. Statement b is an example of anachronistic thinking. Marx wasn‘t even born yet. The Phyisoerats were primitive anarchists whose brains had been rotted by drinking too much French wine, and sea. It. because when you eoosldered the internal money circulation of France onlyr the landowners hall- much money, and so sheer expediency required that only landowners be taxed. c. because I'latn had advocated that. 23. Economic or preeeonotnie thinking is much affected hy what the state of economic Nature is that is thought about at any point in time. So Physiocratic thinking reflected the [acts that: a. a major part at the French GNP originated in agriculture. I "'I. b. France did not have a large volume of International trade. hill c. France‘s internal arrangements had been. much afl'ec1ed by mercantilist regulation which under Colbert had reached a highly detailed I'ot‘ttt— d. the French system of tar farming was highly inefilcient and corrupt and surely needed changing. _, e. All of the above. 19‘. One of the advantages of promoting manufactura to Home was that this; ’_ a. would give Great Britain a long and lasting comparative advantage in manufactured products. '- I '1 fi'would give Great Britain a labor remove in wartime. Labor in manuiacturing industries could be diverted to the armed forces or to production ot'commuditifli needed to prosecute a war. it. would lead to a permanent export surplus and a build up of the gold needed to finance British output. IL would insullte Britain from changes in the balance of payments. I phi-3t." of the above. . h. 3'". Hume‘s dictum is important a! it underlies the positivet'normative distinction that contemporary social sciences including Economies uses. Generalizing broadly. we can represent it. essentially, as saying: _ a. no scientist can believe in religion. I'll: l d h. we have to be totally skeptical about everything. 't. '- -'I' 't .- if. c. we should not attempt to predict about the tuture. ' L / . fd. moral judgments are not relevant to explaining the world of observable realityII and empirical facts cannot provide us with our moral heiiei's. 2. none of the above. 3]. David Hume defined his “degree of assurance” by: *iI-’}'i."-'t' TEA 5'5?“ "'r-“v'fiii-L Page ii a. the root mean square deviation. Empty-[ply up; minim. .9:er b. the covariance of a on y, divided by the variance of z. '- ' yfie following. Assume an event |p| can occur or not. Deduct the number of times p did not occur from the times that it did. [It you divide the result by the number of experiment you have a probabilityl. d. the number of falsification: of a preposition. e. using Locke's “degrees of assent." a_ hip]; Dingoes 31.54: :‘5655 32. David Hume would say a proposition described a fact it: '3: 'st': ‘11:)”: a. everybody you asked about the proposition said it was true. in/aii previous trials or experiments had had one particular outcome. Any time you drop lead in water, it sinks. it is a fact that lead sinks in water. Being a sceptic, and believing only in the evidence of our present senses. he stilt had a problem finding epistemological support for this proposition when it dealt with future droppings of lead in future water. c. it was listed in the French Encyclopedia that the Physiocrats had produced. Hume had an Intense admiration for French intellectuals. d. All of the above. e. None of the above. _. 33. Hume’s dilemma was: . a. that as he made a clear distinction between what we now call “positive” and “normative” statements, he, just like Adam Smith, found himself unable to even make a single normative statement. it Ethics .- could not be grounded in matters of fact, flten no ethicai statement could be justified. [that due to his scepticism, he to Illli not iillli at: espistemological basis for statements about future I outcomes even when such tJIIIEDIEI'IE dealt wlth the realm of the positive. c. that as he was a Whig, he could not get a Chair in a Scottish University. Duty Tories could occupy pmicasoriai chairs in Scotland. And he wanted a Chair and didn’t want to be a Tory. Tough. d. that he believed in having an impofi surplus but he had not figured out how paper money affected thc balance of payments. e. None of the above. 34. Home gets mentioned in relation to the Phillips Curve because: a. when Home wanted to describe the relationship between money and prices he likened it to the way Phillips, a cricketer contemporary to Hume. used to bowl the cricket ball. From then on the curve became known as the Phillips curve. So Hume produced the first diagram on this relationship. I ll- ht, correctly. noted that when a country acquired additional circulating media I"it is only in |the| I interval or intermediate situations, that Ithisl is favorable to industry c. a.w. Phillips who wrote about the curve rested his case mainly by quoting Hume's vlcws on the subject. d. All of the above. e. None of the above. 35. Horne ldon't worry about the accuracy ofthe date| 1 I. provided the first clear exposition of generai equilibrium [in I152]. ii- provided the first clear statement of the quantity theory oft-honey [in n52]. c. 1was the first to cxposit the theory ofcomparative advantage. d. was the first to introduce the notion of elasticity. c. All of the above. 35. In his Theory flfHflt‘fli Storing”: Aflam Smith: ~admade a decisive break with lilil'otiousr Pudendorf, Shafteshury anti Hutchcson. He essentially took over the views on / moral sentiments ofGlambattista I|t’ico. , b. in answer to the question “by what psychological processes do we know whether or not an act is virtuous" Smith built on David Hume’s theory of sympathy. We can put ourselves in the position of another. Also we have -‘ ab imclart'tal spectator" who prompts us on the virtue of actions we take out ofsympathy for others. c. is centrally concerned with how the free—marth works out in everyone‘s best interest. d. shows how our moral sentiments lwhat we nowadays cali a utility functionl guides output in the marketplace. e. None of the above. N Page 'I 31'. Smith in thinking about what set of social and political arrangements would best promote the Wealth of Nations ea me up with: a. model similar to that ol' the Physiocrats whom he had met in France. His model was based on a single tax. on land, on implementing the slogan I"‘iaissez-i'aire. Iaiaaer-passer".I and on following in general a Tory approach to social problems. I}. a system of Imperial Preferencfi. lGreat Britain+ said Smith should build on the Navigation Acts, and regulate Imperial Trade for the benefit of the British and the British colonies thus excluding Great Britain‘s international competitors like France and Holland from lmperiaf markets. ed "a natural system of liberty". Basically letting producers and consumers do their own thing within a social framework that provided security of property 1 social justice, and a natural concern for the poor and unfortunate would not onIy produce moral behavior but would make a nation wealthier than alternative systems. d. the idea of a I‘marlute‘t order” in which all markets national and international are totally free and the only role of government is to provide “police”. As Carlyle said: “Anarchy plus a constable.“ e. None of the above. / .13.. Smith in thinking about the division of labor: a. basically followed l‘lato. Plato believed that persons are born with innate skills and an Ideal City was one in which each person could be employed to produce what the innate skills permitted. This is _ x a supply—side determination of the division of labor. _ ' h.-'tt|ougl|t It to he basically driven by the size of the market. So the division of labor was demand side / driven and would after as the size of the market grew. c. assumed that the more labor is divided. the Ioswer is the cost. This did imply monopoly I'orSmith.. 9.1111 and [c]. “e. All of the above. ,..—.. .\ ___ .39. Smith saw real capital as: a. facilitating labor already in eiisting production. In other words capital goods- made labor more productive. b. ahridging labor already in existing production. In other words one needed less labor per unit of product. e. drawng more labor into the division of production by providing capital goods for it to work with. d. as,a consequence of c+ adding to the total stock of labor employed in the economy. grill of the above. 4t]. Smith‘s “invisible hand"; _ a. was the hand of the benevolent nwnal‘th who listened to his ‘irnparlial spectator“ and regulated the econonly in the general interest. b. was the hand oithe enlightened capitalist who by seeking to maximize hisfher own I.vealtli1 _ would set in motion Wealth—melting activities that would benefit all. fee’is a metaphor for the forces that would lead to market prices converging to natural prices in a natura] system of liberty. Such forces are analagous to the force of gravity - itself also invisible - but powerfully establishing the order of Nature. d. H as the neol‘latonist force that would lend to an icleal division of labor based on a genetic endowment of natural skill. c. All oi'the above. 41. Smith does not use the term “economic growth" of course. But if he had been aware of the term and ball to produce a criterion to measure economic growth it seems clear from the Wealth oanrioa-rs that the criterion would have been: a. the si'ae of Great Britain’s GNP. IL the size of Great Britain‘s export su rplus. e. the increase in per capita product over time. fdf'the increase in real per capita consumption over time. e. the rate of increase of Great Britain‘s sent-ks nl' bullion. 42- Smith is very ciear about What condition would not be consistent with the general weli'are ot' a country: for he say 5: a. “no country can be puissant in {III-reign affairs. should it faii to manage the riotous behavior ot‘ its rabble.” b. Mar country the: sacrifices its sovereignty by permitted the foreigner to liberatly own domestic mauufac'turies forge that defense comes before opulence." ,rg'rrio society can surely be flourishing and happy. of which the far greater part oi the members are poor and miserable” d. “A country that relies on a standing army puts itself into pawn to the nonbeaevoient instincts of lovers of pure force. to individuals 1whose impartial spectators have been duiled by constant drilling and the bruta] exercise of authority by the petty corporate of society.“ e. All ol‘ the above. 43. Adam Smith argued that in new manufactures. or new brahdtes oi commerce. or In new practices In agriculture to _,higb rates of profit will be established and will continue due to custom. ,Jf“W'heu the trade or pflctice becomes thorougny established and well known, the competition reduces them to the " level of other trades.” c. it is easy to establish monopoly. and after that vested interests will continually maintain monopon returns. d. the law of equal return will not apply as there is more information about the new innovations. e the government should regularly intervene to ensure social justice. 44.. Putting the issue in contemporary language. we can interpret Smith as essentially believing that In early societies, the relative price of commodities depended on: /i. their relative marginal labor costs. As land was beid in conunon. and capital goods were inherited. this makes sense todayI given recent economic theories about t‘ciative price. The only marginal costs were labor costs. b. the relative amount of labor “congealed” in products. . c. the relative marginal utilities. d. the relative total utilities. e. the respective equilibrium prices determined by supply and demand. 45. Consider there to be three factors Land, Labor and lCapital with returns Rent, Wages, and Profits. In advanced societies Smith believed the relative prices of nvo commodities would depend on: a. the physical units of the three factors embodied in. the two commodities. b. the relative amount of labor employed to produce the two commodities. c. the relative amount of wages expended [known as the Wages Fund] on the two commodities. J at.“ the relative average costs of production for the two commodities. e. All of the above. 46.. The necessary function of government for Smith were: a. defense. b. provision oi social order. c. provision of justice. d. providing some commodities not In the private interest to product but in the public interest to have, e.g. schools and __ roads. However, payments should be required tor such publicly provided commodities. I.e.’ an of the above. 41. The canons of taxation for Smith were: a. equity. b. efficiency. c. con venien cc. d. economy. e. All at the above. Page 9. 43. [five were to generalize about Smith‘s contribution to distribution theory then it would be to say: hi.“ that he had multiple theories for each of the factors of production and in general did not make a major ' contribution to clarifying the important issues of distribution theory. So me of his ideas did inspire later economists though. h. that he essentially foreshadowed the marginalists - all they had to do was to mathematics: his ideas. c. that this is simply the most important part of the analyses in the Wealth of Nations. d. [b] and [c]. e. that this was an area of discussion he left completely alone throughout his life [NIL Another freebie}. 49. Smith; a, was insistent that progress could only talte place in a society which enjoyed the “natural system of liberty.” h. thought that only societies that followed the Physiocratic imperative “laissez-i‘alre, Misses—passer" would experience econo mic progress. It»: thought that almost all nations even those who had not. enjoyed the most prudent and parsimonious governments would make progress In “tolerany quiet and peaceful times“ due to the “uniform. constant, and uninterrupted ettorl of each man to better himself." d. was gloomy about the possibility oi progress due to the explosive forces of population growth. e. felt the warlike propensities of the human race would totally swamp out feelings of benevolence so human progress was not possible. ,x so. “Das Adam Smith Problem" originated in German scholarly discussions and: a. was the problem created by Smith‘s belief in free trade. German scholars tended to be protectionist. h. was the problem that Smith had borrowed from Eiambattista ‘r'leu’s stage theories. Generally German scholars were repelled by stage theories of history so they knocked Smith for this . fc’.’ referred to the belief of the Germans that Smith held radically different viewpoints on moral behavior in The Theory ofMoroi Sentiments and The Weotrh affiliations. The former work. according to such scholars. suggested humans were innater altruistic. The latter made humans out to he driven by self interested motive-s. d. referred to a Freudian psychological problem that Adam Smith suffered from. Adam Smith never married, and was deficient in libido, and this led him unconsciously to favor a maternal but puritanical State that looked after its citizens in all their virtuous activities. e. All are true except c. SAVE THIS EXAM TO CHECK YOUR RESULTS {IN THE ECON 107 WEBSITE. ...
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