Notable Economic Books & Authors

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Questions and Answers

Within the framework of Hayekian economics, which concept most directly challenges the feasibility of comprehensive socialist economic planning?

  • The informational efficiency of prices, reflecting dispersed knowledge. (correct)
  • The liquidity preference theory, indicating stable monetary equilibrium.
  • The marginal propensity to consume, suggesting predictable aggregate demand.
  • The concept of comparative advantage, enabling international specialization.

Considering the core tenets of both Adam Smith's and Karl Marx's economic theories, which statement best encapsulates a fundamental divergence in their perspectives?

  • Smith believed in the inevitability of technological progress driving societal advancement, whilst Marx was skeptical of technology's impact on labor.
  • Smith advocated for state intervention to correct market failures, while Marx championed a completely laissez-faire approach to allow for the natural progression of economic cycles.
  • Smith focused primarily on the dynamics of industrial production, while Marx was more concerned with the agricultural sector and its role in wealth creation.
  • Smith posited that individual self-interest, guided by the 'invisible hand,' collectively benefits society, whereas Marx argued that capitalism inherently leads to exploitation and class struggle. (correct)

If Keynesian policies were implemented during a period of stagflation, which specific measure would be most contentious due to its potential exacerbation of one aspect of the crisis?

  • Decreasing government expenditure to reduce aggregate demand.
  • Implementing contractionary fiscal policy to curb inflation.
  • Increasing government spending to stimulate demand. (correct)
  • Reducing interest rates to encourage private investment.

In the context of Milton Friedman's monetary theory, what is the most likely outcome of a central bank implementing a policy of sustained, above-trend money supply growth, assuming stable velocity?

<p>A proportional increase in the price level, leading to sustained inflation. (D)</p> Signup and view all the answers

Considering Alfred Marshall's contribution to economic thought, how would he likely critique a modern policy that mandates a minimum wage significantly above the market-clearing wage?

<p>He would view it as a potential distortion of market forces, leading to unemployment and inefficiency. (D)</p> Signup and view all the answers

How might F.A. Hayek critique the use of sophisticated econometric models by central banks to manage inflation, based on his broader philosophical and economic viewpoints?

<p>He would caution against relying too heavily on them, due to the inherent limitations in capturing the tacit and dispersed nature of economic knowledge. (C)</p> Signup and view all the answers

Considering Thomas Malthus's demographic theories, which modern scenario would he likely view as most consistent with his predictions?

<p>A developing nation with high population growth and limited access to resources. (D)</p> Signup and view all the answers

What is a key difference between Keynes's and Friedman's views on the role of government in stabilizing the economy?

<p>Keynes advocated for active fiscal policy interventions, while Friedman preferred rules-based monetary policy. (C)</p> Signup and view all the answers

Which of the following best summarizes the key distinction between Adam Smith's concept of the 'invisible hand' and Karl Marx's analysis of capitalism?

<p>Smith believed self-interest and competition could generate overall prosperity, while Marx saw capitalism as leading to exploitation and inequality. (C)</p> Signup and view all the answers

Suppose that a central bank aims to use monetary policy to simultaneously achieve both full employment and price stability. According to Friedman, which course of action is most likely to generate optimal long-term results, given the inherent limitations of monetary policy?

<p>Target a steady, predictable rate of money supply growth consistent with long-run economic growth, regardless of short-term fluctuations. (C)</p> Signup and view all the answers

Flashcards

The Wealth of Nations

A book by Adam Smith, considered a foundational text in classical economics, advocating for free markets and division of labor.

The Invisible Hand

A concept by Adam Smith describing how self-interested individuals operate through a system of mutual interdependence to create unintended social benefits.

The General Theory of Employment, Interest and Money

Keynes's magnum opus, arguing for government intervention in the economy to mitigate the effects of recessions and depressions.

Capitalism and Freedom

A book by Milton Friedman advocating for minimal government intervention and free markets as the optimal path to economic prosperity and individual liberty.

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Money Mischief

Milton Friedman's exploration of the history of currency and monetary policy, arguing that many economic problems are the result of government intervention in the monetary system.

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There is no such thing as a Free Lunch

A famous quote by Milton Friedman conveying the idea that every service or product has a cost, which someone ultimately must pay either directly or indirectly.

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The Road to Serfdom

A book by F.A. Hayek, a warning about the dangers of centralized planning and the loss of individual freedoms that can result from excessive government control of the economy.

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Das Kapital

Karl Marx's critique of capitalism, analyzing the nature of commodity production, exploitation, and the historical trajectory of capitalism towards its eventual overthrow.

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Principles of Economics

Alfred Marshall's foundational textbook that synthesized classical and marginalist economics, introducing concepts of supply and demand, elasticity, and consumer surplus.

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Principles of Political Economy

Thomas Malthus's work, arguing that population growth will always tend to outrun the food supply, leading to poverty, famine, and other social ills.

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Study Notes

  • Adam Smith wrote "The Wealth of Nations."
  • Smith also authored "The Invisible Hand" and "The Theory of Moral Sentiments."
  • "The Money Game" is another work by Adam Smith.
  • John Maynard Keynes is the author of "The General Theory of Employment, Interest and Money."
  • Keynes also wrote "The Economic Consequences of the Peace."
  • "Essays in Persuasion" is another work by John Maynard Keynes.
  • J.M. Keynes penned "A Treatise on Money."
  • "Indian Currency and Finance" was written by J.M. Keynes.
  • Milton Friedman is the author of "Capitalism and Freedom."
  • Friedman also wrote "Money Mischief" and "Why Government is the Problem."
  • Milton Friedman is credited with the saying, "There is no such thing as a Free Lunch."
  • "Price Theory" is another work by Milton Friedman.
  • F.A. Hayek wrote "The Road to Serfdom."
  • "The Pure Theory of Capital" is also a work by Hayek.
  • Hayek is the author of "The Fatal Conceit: The Errors of Socialism."
  • "The Constitution of Liberty" was written by F.A. Hayek.
  • Karl Marx wrote "Das Kapital."
  • "Theories of Surplus Value" is another work by Karl Marx.
  • Marx also authored "Wage, Labour and Capital" and "The Poverty of Philosophy."
  • Alfred Marshall wrote "Principles of Economics."
  • "Money, Credit and Commerce" is another work by Alfred Marshall.
  • Thomas Malthus is the author of "Principles of Political Economy."

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