chapter 4

Question 1

the basis for classical economics

Answer 1

Self-regulating democracies and capitalistic market developments

Question 2

is considered the Father of Economics

Answer 2

Adam Smith

Question 3

He saw wealth in the great
variety of goods that people traded and consumed

Answer 3

Adam Smith

Question 4

Smith viewed gold and silver as not having
an absolute value. Instead, there were commodities whose value rose and fell with ______________

Answer 4

supply and demand

Question 5

It was self-regulating because
people produced according to what people would buy and people consumed according to what they wanted and could afford

Answer 5

Adam Smith, self regulating market

Question 6

invisible hand was introduced by Adam Smith in his book ‘The Wealth of Nations’. He assumed that an economy can work well in a

Answer 6

free-market scenario where everyone
will work for his/her own interest

Question 7

Adam smith provided the genesis for the concept of?

Answer 7

GDP = Gross Domestic Product

Question 8

Smith used the example of the labor required to make a pin to illustrate the effectiveness
of this method.

Answer 8

Assembly Line Production Method

Question 9

Founder of Modern Utilitarianism

Answer 9

Jeremy Bentham

Question 10

an ethical theory holding that actions are morally right if they tend to
promote happiness or pleasure (and morally wrong if they tend to promote unhappiness or pain) among all those affected by them

Answer 10

Modern utilitarianism

Question 11

Bentham figured prominently among the small number of men who became known
as

Answer 11

philosophical radicals

Question 12

consumer theory is by?

Answer 12

Jeremy bentham

Question 13

he is the father of modern contraceptives

Answer 13

reverend thomas robert malthus

Question 14

“the end justify the means

Answer 14

jeremy bentham

Question 15

states that the supply of food cannot keep up with the growth of the human population, inevitably resulting in disease, famine, war, and calamity

Answer 15

Malthusian trap

Question 16

_____________ as contraceptives

Answer 16

moral restrains

Question 17

happiness is the absence of pain

Answer 17

John Stuart Mill

Question 18

Ideas of cooperatives

Answer 18

John Mill

Question 19

a person can be indifferent and can also favor two products at once

Answer 19

John Stuart Mill

Question 20

Axiom: Reality, we are more consistent. But in real world we become inconsistent because of?

Answer 20

Emotions

Question 21

Thomas Malthus said more population = ?

Answer 21

lesser marginal output

Question 22

was groomed from birth by his father to
become the ultimate Victorian intellectual and utilitarian reformer.

Answer 22

John Stuart Mill

Question 23

holds that “happiness is the sole end of human action, and the promotion of it the test by which to judge of all human conduct”

Answer 23

John Stuart Mill

Question 24

first developed a theory in 1817 to explain
the origin and nature of economic rent.

Answer 24

David Ricardo

Question 25

**“that portion of the
produce of the earth which is paid to the landlord for the use of the original and
indestructible powers of the soil.” **

Answer 25

Rent as defined by David ricardo

Question 26

According to Ricardo rent arises for two main reasons:

Answer 26

(1) Scarcity of land as a factor and
(2) Differences in the fertility of the soil.

Question 27

Ricardo assumed that land had only one use

Answer 27

to grow corn

Question 28

rent of land arises because the different plots of land have different degree of productive power; some lands are more fertile than others. So there are different grades of land.

Answer 28

Differential Rent

Question 29

holds that the value of a good (how much of another good or service it exchanges for in the market) is proportional to
how much labor was required to produce it, including the labor required to produce the raw materials and machinery used in the process.

Answer 29

Labor Theory of Value

Question 30

says that value of a good is not determined by how much labor was put into it but by its
usefulness in satisfying a want and its scarcity

Answer 30

Subjective Theory of Value

Question 31

h stated that “all attempts to improve the real income of workers were futile and that wages perforce remained near the subsistence level.”

Answer 31

Iron Law of Wages

Question 32

describe the inexorable tendency of real wages under capitalism to adhere to a level just sufficient to afford the bare necessities of life.

Answer 32

Iron Laws of wages

Question 33

Iron Law of Wages is a term invented by ?

Answer 33

Ferdinand Lassalle

Question 34

Economic growth takes place due to ____

Answer 34

capital accumulation

Question 35

Capital accumulation output increases. More labour is employed, total
wages paid increases, population increases

Answer 35

Stationary State

Question 36

Growth can be restored through import of corn, i.e., through
international trade. Repel the corn laws, which is beneficial to landlords only. Protection leads to increase in corn prices as the margin increases. This increases rent not profits, which are consumed.

Answer 36

Solution for Stationary State