Untitled Quiz

School of economic thought focused on free markets, self-interest, and limited government intervention. It emerged during the Industrial Revolution.

Considered the father of modern economics, he emphasized the power of self-interest and free markets in his book The Wealth of Nations.

A metaphor for how self-interested actions in a free market can lead to overall economic benefits for society.

Specializing in specific tasks to increase efficiency and productivity, as seen in Adam Smith's famous pin factory example.

The belief that markets should be free from government intervention, as competition naturally regulates prices and quality.

The idea that goods and services should flow freely between countries without restrictions or tariffs.

A principle stating that nations should specialize in producing goods and services they can produce most efficiently, even if they are not the absolute best producers.

Government's role is limited to protecting the nation, administering justice, and providing essential public services like infrastructure and education that the private sector can't provide efficiently.

Natural forces that regulate prices in the market. When demand is high, prices tend to rise; when supply is abundant, prices tend to fall.

The value of a good is based on the amount of labor required to produce it.

Key factors like capital accumulation, division of labor, and innovation drive economic expansion and prosperity.

A country's true wealth lies in its productive capacity and efficient use of resources, not just gold and silver.

Challenged the idea that national wealth was a zero-sum game. Smith argued that trade could be mutually beneficial.

Smith argued that individuals acting in their self-interest, competing in free markets, benefit society overall.

Smith challenged the notion that people should always work for the common good. He believed that individual self-interest in a competitive market leads to better outcomes.

Hume's theory explaining how a country's trade balance naturally corrects itself. If a country exports more than it imports, gold flows in, increasing prices, making exports less competitive, and eventually balancing trade.

Hume's idea that increasing the money supply doesn't affect real economic factors like output in the long run. It only influences prices.

Hume criticized mercantilism's belief that nations should hoard gold and maintain trade surpluses. He argued that wealth is measured by the real goods and services produced, not the amount of gold.

Hume argued that interest rates are not solely determined by the amount of money but by the amount of savings and investment in an economy.

Hume believed that free trade benefits all countries, promoting specialization and increasing overall wealth. He argued against the idea that one country's gain must come at another's expense.

A system that aims to protect domestic industries by restricting imports and increasing exports, often through tariffs and subsidies.

A nation's wealth is determined by the value of goods and services produced and exchanged, not just by the accumulation of gold and silver.

The idea that markets naturally balance themselves without government intervention, achieving equilibrium through supply and demand.

The value of the next best alternative forgone when a choice is made.

Taxes imposed on imported goods, making them more expensive and discouraging imports.

Government payments to domestic producers to encourage production and lower prices.

North challenged the idea that national wealth was solely determined by accumulating gold and silver, arguing that wealth came from production and trade.

North was an early advocate for free trade, arguing that eliminating trade barriers and allowing countries to specialize in what they do best leads to overall economic growth.

Richard Cantillon's key contributions to economics include understanding the role of location on prices, how money supply inflation occurs, and creating a model of the circular flow of income.

Cantillon emphasized the role of entrepreneurs and risk in economic systems. He believed individual decision making, not government control, drove successful markets.

Cantillon's work, particularly his 'Essai sur la Nature du Commerce en Général', laid the foundation for the Classical school of economics and influenced later thinkers like Adam Smith.

David Hume, a prominent figure of the Enlightenment, is known for his philosophical work emphasizing empiricism and skepticism. He believed knowledge comes from experience and questioned abstract ideas.

Cantillon's work significantly influenced the development of the Physiocratic school, a group of economists who focused on land and agriculture as primary sources of wealth.

Cantillon's 'Essai' was published after his death, and the fragmented preservation of his texts meant his ideas were not widely circulated compared to other Enlightenment thinkers.

Cantillon's work on the labor theory of value and circular flow models laid the groundwork for later economic thought, particularly in the Classical school.

David Hume, born into a moderately wealthy family, initially studied law but developed a passion for philosophy and literature at the University of Edinburgh. Despite not completing his degree, he self-educated and became a prominent Enlightenment philosopher.

Cantillon's understanding of entrepreneurship and risk shifted economic focus from state-controlled trade to individual-driven market decisions, a cornerstone of Classical and Austrian economics.

Cantillon's 'Essai' is significant for providing comprehensive insights into market dynamics and entrepreneurship, concepts later developed by Classical economists.