Introduction to Economics
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Questions and Answers

Who is known as the father of Economics?

  • John Maynard Keynes
  • Karl Marx
  • Adam Smith (correct)
  • David Ricardo

    • According to Adam Smith, the main objective of political economy is to ensure equitable distribution of wealth.

    False

    What aspect of economics did Ricardo emphasize that was ignored by Adam Smith?

    Distribution of wealth

    J.M. Keynes described economics as a method rather than a _________.

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

    Match the economist with their contribution:

    <p>Adam Smith = Economics as a science of wealth David Ricardo = Emphasis on distribution of wealth J.M. Keynes = Method of thinking in economics Historical School = Inductive reasoning in economics</p> Signup and view all the answers

    Which of the following is NOT a reason for differences in the definition of economics?

    <p>Personal beliefs of economists</p> Signup and view all the answers

    The wealth definition of economics considers both goods and services.

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

    What did Adam Smith ignore concerning wealth during early times?

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

    What is a primary task of the discipline of economics?

    <p>To study the working of an economic system and its issues</p> Signup and view all the answers

    Economic problems of individuals and societies are entirely independent of social, cultural, and political aspects.

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

    What are economic wants?

    <p>Economic wants are wants that can be satisfied by the consumption of goods and services.</p> Signup and view all the answers

    The types of economic systems include capitalist, socialist, and _____ economies.

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

    Match the economic problems with their descriptions:

    <p>Labour management relations = Issues between employers and employees regarding working conditions Exploitation of labour = Unfair treatment of workers to maximize profits Inequalities of income and wealth = Discrepancies in financial resources among different social groups Cyclical fluctuations = Economic ups and downs affecting production and employment</p> Signup and view all the answers

    Which of the following is NOT a characteristic of wants?

    <p>They decrease in number with time</p> Signup and view all the answers

    Increasing the availability of resources is one solution to economic problems.

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

    What is a main problem faced by individuals in a simple economy?

    <p>Poverty and economic insecurity.</p> Signup and view all the answers

    What does positive economics focus on?

    <p>Investigating what is</p> Signup and view all the answers

    Normative economics is concerned with welfare propositions.

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

    Name one reason why normative economics cannot always lead to a happy state of affairs in an economy.

    <p>Lack of uniformity in choice of objectives</p> Signup and view all the answers

    Economics is considered an ____ because it can be applied to achieve various goals.

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

    Who propounded the approach of positive economics?

    <p>Lionel Robbins</p> Signup and view all the answers

    Match the economists with their respective contributions:

    <p>Lionel Robbins = Positive economics Alfred Marshall = Normative economics</p> Signup and view all the answers

    Economics can be classified only as a positive science.

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

    What is the ultimate objective of policies made under economics?

    <p>To solve economic problems</p> Signup and view all the answers

    What is the primary focus of economics according to Samuelson?

    <p>How society chooses to allocate scarce resources</p> Signup and view all the answers

    Economics can be considered a perfect science due to its ability to predict human behavior accurately.

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

    Name one method used in the study of economics.

    <p>Inductive Reasoning or Deductive Reasoning</p> Signup and view all the answers

    Economics aims to increase collective __________.

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

    Match the following concepts with their definitions:

    <p>Law of Demand = As price increases, quantity demanded decreases Economic Growth = Increase in the production of goods and services Economic Fluctuation = Variations in economic activity over time Forecasting = Predicting future economic events</p> Signup and view all the answers

    Which of the following statements about economics is true?

    <p>Economics involves both empirical and theoretical approaches.</p> Signup and view all the answers

    Economic laws are derived solely from absolute and fixed patterns of human behavior.

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

    The study of economics often uses a __________ model building approach.

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

    Who originally described economics as a study of wealth and mankind's activities related to well-being?

    <p>Alfred Marshall</p> Signup and view all the answers

    The scarcity definition of economics ignores the concept of limited resources.

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

    According to Lionel Robbins, what should economics primarily concern itself with?

    <p>Human behavior between ends and scarce means</p> Signup and view all the answers

    A.C. Pigou's definition of economics is focused on social welfare that can be measured in terms of __________.

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

    Which of the following is a demerit of Alfred Marshall's welfare definition of economics?

    <p>It ignores immaterial wealth.</p> Signup and view all the answers

    Match the economists with their definitions of economics:

    <p>Alfred Marshall = Study of wealth and man A.C. Pigou = Social welfare measured in money Lionel Robbins = Human behavior with scarce means Paul A. = Focus on growth economics</p> Signup and view all the answers

    Robbins argued that economics should concern itself with 'what ought to be'.

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

    What is a fundamental premise of economics according to the scarcity definition?

    <p>Individuals should choose alternatives that yield the greatest net gain.</p> Signup and view all the answers

    Study Notes

    Introduction to Economics

    • Economics is essential for individuals, households, businesses, institutions, and governments.
    • Initially intertwined with philosophy, economics now focuses on economic systems, issues, and solutions.
    • Important economic problems vary from poverty in simple economies to distributive justice and instability in developed industrial economies.

    Study of Economic Systems

    • Economics examines various aspects including:
      • Structure
      • Working
      • Performance
      • Problems and solutions
    • Types of economies: capitalist, socialist, mixed.
    • Analysis of economic decisions and relationships among economic units.

    Economic Wants

    • Economic wants are those satisfied by consuming goods and services; non-economic wants do not rely on this.
    • Characteristics of wants include:
      • Re-emergence even after satisfaction.
      • Increase in variety and number over time.
    • Problems arise from insufficient resources and mismatched resources and wants.
    • Solutions involve increasing resource availability and ensuring efficient use.

    Defining Economics

    • Definitions vary due to:
      • Economic structure
      • Development stage
      • Economist expertise
      • Study purpose.
    • Adam Smith defined economics as the science of wealth, focusing on material goods without addressing income distribution.
    • David Ricardo shifted focus to wealth distribution, highlighting the neglect of inequalities in earlier definitions.

    Welfare Aspect of Economics

    • Alfred Marshall emphasized economics as the study of individual and social action in relation to well-being.
    • While addressing wealth, it also considers human welfare; however, it overlooks non-material wealth.
    • A.C. Pigou measured social welfare in monetary terms, making his definition more restricted yet comprehensive.

    Scarcity and Choices in Economics

    • Lionel Robbins defined economics as studying human behavior concerning scarce resources and unlimited wants.
    • Key features include:
      • Limited resources and unlimited wants.
      • Emphasis on alternative uses of resources.
    • Robbins asserted economics should focus on real situations rather than ideals.
    • Criticism includes its narrow scope and neglect of public services.

    Growth Definition of Economics

    • Paul Samuelson described economics as the study of choices in resource allocation, considering both present and future consumption.
    • Focuses on the benefits and costs of resource distribution.

    Nature and Scope of Economics

    • Recognizes the dynamic economy and evolving problems, utilizing model-building approaches for analysis.
    • Economics aims to enhance collective welfare, promote growth, and mitigate economic fluctuations.

    Economics: Science or Art?

    • Economics as a Science:
      • Relies on cause-effect relationships and generalizations.
      • Involves measurement and methodological approaches.
      • Aims for forecasting economic behavior.
    • Limitations exist due to the unpredictability of human behavior, lack of controlled experiments, and variability in behavior patterns.

    Economics as an Art

    • Art represents practical application of knowledge for achieving objectives in economics.
    • Theoretical frameworks inform the formation of policies to solve economic issues.

    Positive vs Normative Economics

    • Positive economics focuses on "what is," devoid of value judgments, concerned with factual analysis.
    • Normative economics addresses "what ought to be," making value judgments and proposing welfare improvements.
    • Challenges arise in uniform objective selection, information gaps, and the inability to pursue multiple objectives simultaneously.

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    Description

    Explore the foundational concepts of economics including economic systems and the nature of economic wants. This quiz covers the evolution of economics from philosophy to its current focus on solving various economic problems. Test your understanding of different economic structures and their performance.

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