nnnnnnnnnnn Flashcards
What is the zero-sum concept?,
A situation where one participant’s gain equals another’s loss. Total gains and losses sum to zero.”
What is mercantilism?,
“An economic policy (16th–18th centuries) focused on accumulating wealth (gold/silver) through trade surpluses.”
What factors influenced mercantilism?,
“Colonialism, protectionism, government intervention, export-oriented production, and population growth.”
How do Marxist and classical economics differ?,
“Classical: Free markets, supply and demand, self-interest. Marxist: Class struggle, labor exploitation, critique of capitalism.”
What are the key differences between classical and Keynesian economics?,
“Classical: Laissez-faire, self-correcting markets, long-term growth. Keynesian: Government intervention, demand-driven, short-term stabilization.”
What are the principles of classical economics?,
“Micro: Individual rationality, supply and demand, perfect competition. Macro: Say’s Law, long-term growth, minimal government intervention.”
What is Say’s Law?,
“‘Supply creates its own demand.’ Production generates income to purchase all goods.”
What are the assumptions of Say’s Law?,
“Flexible prices and wages, no involuntary unemployment, savings are automatically invested.”
What are the criticisms of Say’s Law?,
“Keynes argued demand can fall short, causing recessions. Ignores hoarding, liquidity preference, and demand shocks.”
How does Say’s Law relate to full employment?,
“Classical economists believe markets naturally tend toward full employment. Keynes argued involuntary unemployment can persist due to insufficient demand.”
What are the similarities between communism and socialism?,
“Both advocate collective ownership of resources and oppose capitalism.”
What are the differences between communism and socialism?
,”Communism: Classless, stateless society; all property is communally owned. Socialism: State ownership of key industries; private property and markets may exist.”
How do Marx and Keynes differ on labor?,
“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.”
What is the labor theory of value?
,”The value of a good is determined by the labor required to produce it. Marx argued workers are exploited under capitalism.”
What is Keynesian demand management?,
“Managing aggregate demand to stabilize the economy. Increase spending during recessions; reduce spending during booms.”
What is the historical significance of mercantilism?,
“Dominant economic policy in Europe (16th–18th centuries). Laid groundwork for modern trade policies but was criticized for its zero-sum view of trade.”
What is the ‘invisible hand’ in classical economics?,”
The idea that individuals pursuing self-interest indirectly benefit society, as if guided by an ‘invisible hand.’”
What is the role of government in classical economics?,”
Minimal intervention. Markets are self-regulating and efficient.”
What is the role of government in Keynesian economics?,
“Active intervention to manage demand, stabilize the economy, and reduce unemployment.”
What is the labor theory of value in Marxist economics?,
“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.”
What is the goal of communism?,
“To create a classless, stateless society where all property is communally owned.”
What is the goal of socialism?,
“To reduce inequality through state ownership of key industries, while private property and markets may still exist.”
What is the critique of capitalism in Marxist economics?,
“Capitalism inherently leads to inequality, exploitation of labor, and economic crises.”
What is the critique of classical economics in Keynesian economics?,
Classical economics assumes markets are self-correcting, but Keynes argued they can fail, leading to demand shortages and unemployment.”
