Econ434truefalse - HistoryofEconomicThought True-False...

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History of Economic Thought True-False Questions Classical Theory 1. Adam Smith perceived the "invisible hand" of the market system as serving the interests of profit seekers to the detriment of the consuming public. 2. Adam Smith believed that market solutions tend to be more efficient than government regulations. 3. Adam Smith emphasized the invisible hand of government policy as the proper cure for market system deficiencies. 4. Adam Smith argued that taxes should be certain and highly regressive. 5. The first formulation of the principle of absolute advantage is attributed to David Ricardo. 6. David Ricardo is best remembered as a trade theorist for formulating the Principle of Comparative Advantage . 7. David Ricardo’s law of comparative advantage asserts that net gains from trade will be realized whenever the relative pre-trade production costs of various goods differ between countries. 8. The utilitarian philosophy was formalized by an eccentric English lawyer named Jeremy Bentham. 9. Thomas Malthus believed that, if left unchecked, population increases at a geometric rate while food increases at an arithmetic rate. 10. Thomas Malthus classified several preventive checks on population growth rates, including war, pestilence, and famine. 11. The economic concept of a subsistence wage is based on assumptions similar to those serving as foundations for the biological S-curve used to illustrate Malthusian population theory. 12. One major criticism of the Malthusian theory of population is that Thomas Malthus did not account for technological change. © 2006 Economic sInteractive History of Economic Thought 1
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Neoclassical Economics 13. Among the most notable achievements of Antoine Augustin Cournot was his development of MR=MC , the profit maximization rule. 14. Vilfredo Pareto developed a theory of economic welfare that is still important today. 15. The origin of partial equilibrium analysis is generally attributed to Leon Walras. 16. Among Alfred Marshall's most significant contributions to economic theory was his use of “ Ceteris paribus ” to simplify the problem of dealing with continuous change. 17. According to John Bates Clark, there will be no pure economic profits in a purely competitive economy if all resources are paid the values of their marginal products. All income from production will be absorbed by resource payments. Austrian Economics 18. Ludwig von Mises strongly supported the idea of countercyclical fiscal policy. 19. Friedrich Hayek believed that the extension of government is the enemy of freedom. 20. Austrian economics focuses on freedom of entry and exit and innovators' desires for profits as the crux of competition, and rejects the "many buyers-many sellers" approach that traditional theory emphasizes. An Overview of Macroeconomics
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This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

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Econ434truefalse - HistoryofEconomicThought True-False...

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