History of Economic Thought Overview
32 Questions
2 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What was the primary goal of mercantilism during the 16th to 18th centuries?

  • To minimize wealth accumulation by the state
  • To maintain a positive balance of trade (correct)
  • To promote individual economic freedom
  • To encourage the elimination of protective policies

    • Who is regarded as the 'father of modern economics'?

  • John Stuart Mill
  • Thomas Robert Malthus
  • David Ricardo
  • Adam Smith (correct)

    • Which concept is primarily associated with Adam Smith's economic theories?

  • The marginal utility theory
  • The social contract
  • The labor theory of value
  • The invisible hand (correct)

    • What did classical economists generally believe about state intervention in the economy?

    <p>It often hinders economic progress</p> Signup and view all the answers

    Which of the following schools of economic thought emerged after mercantilism?

    <p>Classical School</p> Signup and view all the answers

    During which period did the Neoclassical School begin to develop?

    <p>1860s to present</p> Signup and view all the answers

    What criticism did Adam Smith make regarding the motivations of economic agents?

    <p>They inadvertently promote society's interests</p> Signup and view all the answers

    How did the Classical School contribute to the evolution of economic thought?

    <p>By promoting individual self-interest as a key motivator</p> Signup and view all the answers

    What is the primary benefit of countries trading based on comparative advantage?

    <p>It enables countries to specialize in goods they can produce at a lower opportunity cost.</p> Signup and view all the answers

    According to Malthus, what factors might control the growth of human population?

    <p>Vice, war, and epidemics.</p> Signup and view all the answers

    What does utilitarianism primarily focus on in terms of moral worth?

    <p>The likelihood of happiness produced by an action.</p> Signup and view all the answers

    What is meant by the term 'comparative advantage'?

    <p>The capability to produce a good at a lower opportunity cost than another producer.</p> Signup and view all the answers

    Which of the following statements aligns with John Stuart Mill's perspective on liberty?

    <p>The only valid reason for interfering with liberty is to prevent harm to others.</p> Signup and view all the answers

    What did Thomas Robert Malthus predict about the consequences of unchecked population growth?

    <p>It would ultimately lead to famine and population decline.</p> Signup and view all the answers

    What economic principle does David Ricardo's work emphasize in trade?

    <p>Comparative advantage.</p> Signup and view all the answers

    What is a key concept introduced by Alfred Marshall in his work on economics?

    <p>Marginalism</p> Signup and view all the answers

    In 'Utilitarianism', how does Mill suggest actions should be judged?

    <p>By their ability to produce happiness.</p> Signup and view all the answers

    What method does Marshallian economics utilize to analyze industry behavior?

    <p>Partial equilibrium method</p> Signup and view all the answers

    Which of the following statements best describes the view of classical economists before the Great Depression?

    <p>Markets were thought to adjust quickly towards full employment.</p> Signup and view all the answers

    Which work is John Maynard Keynes best known for?

    <p>General Theory of Employment, Interest and Money</p> Signup and view all the answers

    Which term did Veblen introduce to critique the continuity between classical and neoclassical economics?

    <p>Neoclassical</p> Signup and view all the answers

    What did the Great Depression reveal about classical economic theory?

    <p>It undermined the belief in swift market adjustments.</p> Signup and view all the answers

    In Marshallian economics, what does the Marshallian cross represent?

    <p>The relationship between supply and demand</p> Signup and view all the answers

    What stance did Marshallian economics take regarding state intervention in the economy?

    <p>Defense of free enterprise with some limited interventions.</p> Signup and view all the answers

    What key factor does Keynesian economics emphasize in determining aggregate economic behavior?

    <p>Income effects</p> Signup and view all the answers

    According to Keynesian theory, why is government intervention necessary?

    <p>To manage weak aggregate demand</p> Signup and view all the answers

    What was John Maynard Keynes's perspective on the long run?

    <p>It is irrelevant to current economic issues.</p> Signup and view all the answers

    Which statement reflects Alvin Hansen's relationship with Keynesian economics?

    <p>He was an initial critic who later supported the ideas.</p> Signup and view all the answers

    In the context of the IS-LM model, what do the 'IS' and 'LM' curves represent?

    <p>Investment-Saving; Liquidity Preference-Money Supply</p> Signup and view all the answers

    What key contribution did Hicks make in relation to Keynesian theory?

    <p>He pointed out indeterminacy issues in interest rates.</p> Signup and view all the answers

    Which of the following is NOT a measure proposed by Keynes for economic stability?

    <p>Interest rate increases</p> Signup and view all the answers

    What was a primary distinction between Keynesian economists and classical economists?

    <p>Belief in short-run management vs. long-run solutions</p> Signup and view all the answers

    Study Notes

    History of Economic Thought

    • Overview of Schools of Thought:
      • Mercantilism (1500s-1700s)
      • Classical School (1700s-1850s)
      • Neoclassical School (1860s-present)
      • Keynesian School (1880s-present)

    Mercantilism

    • Period: 16th-18th centuries
    • Dominant economic school during the emergence of capitalism
    • State's role: central in accumulating wealth (especially precious metals)
    • Balance of trade: maintain a positive balance
    • Policy: utilize legislation and protective policies to increase national wealth

    The Classical School

    • Period: coincides with the Industrial Revolution
    • Key Economists:
      • Adam Smith (1723-1790)
      • David Ricardo (1772-1823)
      • Thomas Robert Malthus (1766-1834)
      • John Stuart Mill (1806-1873)

    Adam Smith

    • The Wealth of Nations (1776)
    • Invisible hand concept: self-interest drives economic activity, benefiting society.
    • Criticized state intervention, emphasizing individual self-interest.

    David Ricardo

    • On the Principles of Political Economy and Taxation (1817)
    • Comparative advantage: countries gain by specializing in goods where they have a lower cost of production.

    Thomas Robert Malthus

    • An Essay on the Principle of Population (1798)
    • Malthusian Population Trap: population growth outpaces food production, leading to inevitable famine and check on growth
    • Power of population is superior to the power of the earth

    John Stuart Mill

    • Utilitarianism (1863)
    • Utilitarianism: actions are judged by their contribution to overall happiness, not on religious grounds.

    Neoclassical School

    • Key Economist: Alfred Marshall (1842-1924)
    • Principles of Economics (1890)
    • Economic concepts:
      • Supply and demand
      • Marshallian Cross
      • Marginalism
    • Marginalism: Decisions based on incremental adjustments

    Marshallian Economics

    • Partial equilibrium method: analyzing individual markets isolating factors
    • Focus on supply and demand curves and equilibrium price and quantity
    • Analysis of returns to scale (increasing & decreasing)
    • Limited role for government intervention

    Keynesian School

    • Key Economist: John Maynard Keynes
    • Explanation for the Great Depression
    • The General Theory of Employment, Interest, and Money
    • Aggregate demand is crucial for economic stability:
    • Government intervention is essential during economic downturns
    • "Long run" not a reliable guide to current economic situations
    • Macroeconomics do not equal microeconomics

    Alvin Hansen

    • American Keynes
    • Math error in Keynes' theories
    • Fiscal Policy and Business Cycles
    • IS-LM model contributions and indeterminacy problems

    Hicks and Hansen Synthesis

    • IS-LM model: graphical representation showing the interaction of investment and savings, and money supply and demand in determining equilibrium

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Description

    Explore the key schools of economic thought from Mercantilism to Keynesian economics in this quiz. Delve into the contributions of prominent economists like Adam Smith and David Ricardo, and understand the evolution of economic ideas over the centuries.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser