Physiocracy

Question 1

Physiocracy

Answer 1

• Means rule of nature
• Laissez faire
• Emphasis on Agriculture
• Only taxed landowners
• Viewed the macro-economy as a circular flow of goods and money

Question 2

Who benefits from Physiocracy

Answer 2

• Peasants avoid taxes
• Businesses helped by reduced regulation
• Landowners get hurt by taxes

Question 3

Contributions of Physiocracy

Answer 3

• Established economics as a social science
• Tableau Economique
• Diminishing returns
• Marginalism
• Recognition of the issue of shifting of tax burdens
• Laissez faire

Question 4

Francois Quesnay

Answer 4

Physiocrat

• gave crude representation of flows of money and goods between different sectors in the economy
• Stressed the interdependence of sectors and markets
• Is an attempt at analyzing the entire economy by means of an abstract model (novelty at that time, but today is the main analytically tool)

Question 5

Anne Robert Jacques Turgot

Answer 5

Physiocrat
Advocated:
-Taxing the nobility, stop taxing subsistence-level peasants
-People should be free to choose their occupations
-Allow religious liberty
-Universal education
-Create a central bank
-Increase saving to increase investment