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Question 1

What is the zero-sum concept?,

Answer 1

A situation where one participant’s gain equals another’s loss. Total gains and losses sum to zero.”

Question 2

What is mercantilism?,

Answer 2

“An economic policy (16th–18th centuries) focused on accumulating wealth (gold/silver) through trade surpluses.”

Question 3

What factors influenced mercantilism?,

Answer 3

“Colonialism, protectionism, government intervention, export-oriented production, and population growth.”

Question 4

How do Marxist and classical economics differ?,

Answer 4

“Classical: Free markets, supply and demand, self-interest. Marxist: Class struggle, labor exploitation, critique of capitalism.”

Question 5

What are the key differences between classical and Keynesian economics?,

Answer 5

“Classical: Laissez-faire, self-correcting markets, long-term growth. Keynesian: Government intervention, demand-driven, short-term stabilization.”

Question 6

What are the principles of classical economics?,

Answer 6

“Micro: Individual rationality, supply and demand, perfect competition. Macro: Say’s Law, long-term growth, minimal government intervention.”

Question 7

What is Say’s Law?,

Answer 7

“‘Supply creates its own demand.’ Production generates income to purchase all goods.”

Question 8

What are the assumptions of Say’s Law?,

Answer 8

“Flexible prices and wages, no involuntary unemployment, savings are automatically invested.”

Question 9

What are the criticisms of Say’s Law?,

Answer 9

“Keynes argued demand can fall short, causing recessions. Ignores hoarding, liquidity preference, and demand shocks.”

Question 10

How does Say’s Law relate to full employment?,

Answer 10

“Classical economists believe markets naturally tend toward full employment. Keynes argued involuntary unemployment can persist due to insufficient demand.”

Question 11

What are the similarities between communism and socialism?,

Answer 11

“Both advocate collective ownership of resources and oppose capitalism.”

Question 12

What are the differences between communism and socialism?

Answer 12

,”Communism: Classless, stateless society; all property is communally owned. Socialism: State ownership of key industries; private property and markets may exist.”

Question 13

How do Marx and Keynes differ on labor?,

Answer 13

“Marx: Labor is exploited under capitalism; advocates for abolishing wage labor. Keynes: Labor is a factor of production; advocates for government intervention to ensure full employment.”

Question 14

What is the labor theory of value?

Answer 14

,”The value of a good is determined by the labor required to produce it. Marx argued workers are exploited under capitalism.”

Question 15

What is Keynesian demand management?,

Answer 15

“Managing aggregate demand to stabilize the economy. Increase spending during recessions; reduce spending during booms.”

Question 16

What is the historical significance of mercantilism?,

Answer 16

“Dominant economic policy in Europe (16th–18th centuries). Laid groundwork for modern trade policies but was criticized for its zero-sum view of trade.”

Question 17

What is the ‘invisible hand’ in classical economics?,”

Answer 17

The idea that individuals pursuing self-interest indirectly benefit society, as if guided by an ‘invisible hand.’”

Question 18

What is the role of government in classical economics?,”

Answer 18

Minimal intervention. Markets are self-regulating and efficient.”

Question 19

What is the role of government in Keynesian economics?,

Answer 19

“Active intervention to manage demand, stabilize the economy, and reduce unemployment.”

Question 20

What is the labor theory of value in Marxist economics?,

Answer 20

“The value of a good is determined by the labor required to produce it. Marx argued workers are exploited because they are paid less than the value they create.”

Question 21

What is the goal of communism?,

Answer 21

“To create a classless, stateless society where all property is communally owned.”

Question 22

What is the goal of socialism?,

Answer 22

“To reduce inequality through state ownership of key industries, while private property and markets may still exist.”

Question 23

What is the critique of capitalism in Marxist economics?,

Answer 23

“Capitalism inherently leads to inequality, exploitation of labor, and economic crises.”

Question 24

What is the critique of classical economics in Keynesian economics?,

Answer 24

Classical economics assumes markets are self-correcting, but Keynes argued they can fail, leading to demand shortages and unemployment.”

Question 25

What is the role of wages in classical economics?,

Answer 25

Wages are determined by supply and demand in the labor market.”

Question 26

What is the role of wages in Marxist economics?,

Answer 26

“Wages are exploitative; workers are paid less than the value they create.”

Question 27

What is the role of wages in Keynesian economics?,

Answer 27

“Wages can be rigid, leading to unemployment. Government intervention is needed to ensure fair wages and full employment.”

Question 28

What is the role of savings in classical economics?,”

Answer 28

Savings are automatically invested, ensuring economic stability.”

Question 29

What is the role of savings in Keynesian economics?,

Answer 29

“Savings can lead to demand shortages if not invested. Government must manage demand to prevent recessions.”