Questions and Answers
Which economic school includes Greek, Roman, Indian, Arab, Persian, and Chinese thought?
During which years did Mercantilism predominantly influence Europe?
What was the unique feature of Mercantilism as an economic philosophy?
Which economist is most closely associated with the Classical School of economic thought?
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According to Classical economics, what is the ideal role of government in markets?
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Which of the following is NOT considered a part of the Pre-Modern School of thought?
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What aspect of the Classical School of thought was emphasized by its proponents?
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Which economist is NOT associated with Mercantilism?
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What is the primary belief of the classical economic approach regarding markets?
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Which factor was deemed most significant in determining value according to classical economists?
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What period is recognized as the duration of classical economic thought?
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Which of the following best defines mercantilism?
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What was one of the main goals of mercantilist policies?
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How did mercantilism view the role of the state?
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Which event was notably frequent during the mercantilist period?
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What was a significant economic change that occurred during the mercantilism era?
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What is the opportunity cost of spending money on a vacation?
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Which example best illustrates the concept of opportunity cost?
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What do trade-offs in economics primarily involve?
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Why is unemployment considered unfavorable?
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What does a government spending more on health care generally imply?
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What is the primary focus of active stabilization policies?
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Which of the following scenarios exemplifies opportunity cost?
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In the context of economics, trade-offs often require individuals to:
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What was the primary economic objective of each government during the mercantilist period?
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What was a key criticism of mercantilism regarding the perception of gold and silver?
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How did mercantilism suggest nations interact with foreign competition?
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Which of the following best describes the Physiocrats' belief about the source of national wealth?
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In which country did the principles of Physiocracy primarily originate?
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Who is credited with first presenting the ideas that formed the basis of Physiocracy?
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Which of the following was NOT a criticism levelled against mercantilism?
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What was the term used by the Physiocrats to refer to themselves?
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What does a trade-off refer to in economic terms?
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What is opportunity cost?
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How are choices typically made according to economists?
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What can induce individuals to conserve water when the price is increased?
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What does the production possibilities curve illustrate?
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Which of the following best describes a choice made at the margin?
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Why do some people believe that price increases will not affect water consumption?
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What type of analysis can be gained by assessing choices at the margin?
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Study Notes
Classification of Economic Thought
- Economic thought is categorized into three main schools to enhance understanding.
- Phases include Pre-Modern School, Early Modern School, and Modern School.
Pre-Modern School
- Encompasses economic ideas from Greek, Roman, Indian, Arab, Persian, and Chinese civilizations.
Early Modern School
- Primarily includes mercantilism and physiocracy as key economic thoughts.
Modern School
- Features influential economists like Adam Smith and John Maynard Keynes, along with other classical economists.
Mercantilism
- The earliest economic philosophy (1500-1750 AD) prevalent in Western Europe, especially England and France.
- Advocated for wealth accumulation through export promotion and import restriction.
- Key figures include Thomas Mun, William Petty, and Gerard de Malynes.
- Adam Smith described the mercantile system focused on enriching nations via government intervention in trade.
Characteristics and Goals of Mercantilism
- Seeks a favorable balance of trade to increase gold and silver reserves.
- Prioritized the interests of merchants and manufacturers, supporting entities like the British East India Company.
- Military expenditure was tied to economic strategies, necessitating strong currency for defense and expansion.
Criticisms of Mercantilism
- Overemphasis on commerce at the expense of agriculture.
- Misplaced value on precious metals and erroneous beliefs about trade balance.
- Narrow viewpoint lacking in international trade concepts.
Physiocracy
- Emerged in 18th century France, emphasizing agriculture as the sole source of national wealth.
- Term "Physiocrat" means "Government of Nature"; associated thinkers include Richard Cantillon, François Quesnay, and Jean Claude Marie Vincent de Gournay.
- Viewed unemployment negatively and advocated for stabilization policies to manage economic volatility.
Opportunity Cost
- Represents the value of the next best alternative foregone when a choice is made.
- Examples include choices like government spending reallocations or personal leisure sacrifices.
Trade-offs in Economics
- Refers to the decision-making process of prioritizing one alternative over others.
- Each decision involves sacrificing potential benefits from the non-chosen options.
Differences between Trade-offs and Opportunity Cost
- Trade-offs involve the decision-making aspect, while opportunity cost quantifies the lost value from the alternative not pursued.
Choices Made at the Margin
- Economists emphasize that choices are made based on marginal decisions, incremental adjustments in behavior rather than absolute choices.
- Pricing influences consumption choices; examples include water usage patterns responding to price changes.
Production Possibilities Curve
- Visual tool illustrating the maximum efficient production of two goods, highlighting trade-offs and opportunity costs in resource allocation.
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Description
Test your knowledge on the various schools of economic thought throughout history. This quiz covers the Pre-Modern, Early Modern, and Modern schools, highlighting key economists and their contributions. Understand how these schools classify economic ideas.
