checkup #2

Question 1

Who was the author of the Wealth of Nations?

Answer 1

Adam Smith

Question 2

Who was the author of Das Kapital and Communist Manifesto?

Answer 2

Karl Marx

Question 3

a small capitalist

Answer 3

petty bourgeois

Question 4

practice that leads to economic collapse

Answer 4

over-expanded credit

Question 5

Was Adam Smith a socialist or a communist?

Answer 5

socialist.

Question 6

Was Karl Marx a socialist or a communist?

Answer 6

communist.

Question 7

What is mercantilism?

Answer 7

an economic system with a highly controlled market and many government regulations.

Question 8

what is the strongest motivation in trade?

Answer 8

self-interest

Question 9

what is the real price of a good or service?

Answer 9

labor

Question 10

what is the nominal price of a good or service?

Answer 10

money

Question 11

what is the cost of production?

Answer 11

the natural price

Question 12

material used in production?

Answer 12

stock

Question 13

tools or equipment used in production?

Answer 13

capital

Question 14

price at which a product is sold?

Answer 14

the market price

Question 15

desire for a product?

Answer 15

demand

Question 16

demand without ability to pay?

Answer 16

absolute demand

Question 17

demand of those willing and able to pay?

Answer 17

effectual demand

Question 18

lack of all types of restraints on trade?

Answer 18

laissez-faire

Question 19

what prevents limiting of production to raise prices?

Answer 19

competition

Question 20

What was the goal of mercantilism?

Answer 20

to increase a nation’s supply of precious metals by encouraging the sale of products to other nations in exchange for gold while restricting the purchase of products from other nations in exchange for gold.

Question 21

According to Adam Smith, what does the DIVISION OF LABOR lead to?

Answer 21

greater production because each person performs only one task.

Question 22

What happens to society because of the division of labor?

Answer 22

it becomes more prosperous

Question 23

who was all about the “labor in exchange for any commodity” thing?

Answer 23

Adam Smith

Question 24

Why did Smith believe that only labor was stable?

Answer 24

because the values of other alternatives varied

Question 25

what does the cost of production include?

Answer 25

wages, profit or capital investment, and rent.

Question 26

What do the prices of all commodities continually gravitate toward?

Answer 26

the natural price.

Question 27

What are government's only functions according to Adam Smith?

Answer 27

justice, welfare, and defense.

Question 28

What is an economic theory also called?

Answer 28

an economic model.

Question 29

What two people wrote the Communist Manifesto?

Answer 29

Karl Marx and Freidrich Engels

Question 30

What did Marx greatly exaggerate the importance of in the process of production?

Answer 30

capital

Question 31

What did Karl Marx believe about capitalism?

Answer 31

He believed that capitalism allowed the bourgeoisie to exploit the working class

Question 32

What did Karl Marx believe about all the capitalist's profit?

Answer 32

it was a result of the exploitation of labor

Question 33

According to Karl Marx's economic model, what is true of capitalism?

Answer 33

it will eventually collapse

Question 34

According to Karl Marx's economic model, what does capitalism have the inherent tendency to do?

Answer 34

overproduce

Question 35

According to Karl Marx's economic model, what does capitalism have the tendency to do regarding credit?

Answer 35

it has the tendency to expand it

Question 36

According to Karl Marx's economic model, what will happen to capitalism inevitably?

Answer 36

it will produce business cycles

Question 37

According to Karl Marx's economic model, what will eventually happen to capitalism?

Answer 37

eventually a major boom will destroy it

Question 38

According to Karl Marx's economic model, after a major boom destroys capitalism, what happens to society?

Answer 38

the proletariet takes over and a new communist society is established

Question 39

According to Karl Marx's economic model, what does the new utopian society have no need of?

Answer 39

industry or money

Question 40

According to Karl Marx's economic model, what happens as a result of government not vanishing in communist nations?

Answer 40

leaders modified Marxism and claimed that a transition stage was necessary.