Unit 3 Flashcards

1
Q

BEFORE 1776

A
  • Mercantilism
  • Gold and silver
  • More on export than import
  • The colonial models
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q
  • The birth of classical economics
  • Wealth of the Nations – 1776
A

ADAM SMITH

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Smith introduced that if a person followed their own _______, they would be serving the common good.

A

self-interests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

“The _________ is not based on accumulation of gold and silver but on the value of good and services”

A

wealth of the nations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

To increase the wealth one of the key is worker productivity (Division of labor and Specialization of Labor)

A

TRANSFORMATIONAL THOUGHT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

cost of production

A

Labor theory value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

o Consumer maximize utility
o Producers maximize their profits

A

Invisible hand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

It means happiness

A

utility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

______ is key to the prosperity of nations

A

Free trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

British economist, __________ expanded on Smith’s idea by introducing the theory of comparative advantage

A

David Ricardo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

“When both countries concentrate on producing what they are best at and then trade, everyone benefits.”

A

theory of comparative advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Comparative advantage, both countries have opportunity costs. But the country who has a __________ has the comparative advantage.

A

lower opportunity cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

the foundation of modern
international trade

A

theory of comparative advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

When almost all scholar are peaching ideas like private property and free-trade and free-market, along comes the __________ in 1848.

A

Communist Manifesto

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Communist Manifesto was created by?

A

KARL MARX AND FRIEDRICH ENGELS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

“Rather than investigating individual behavior observed economic classes and argued that history can be explained by the struggle between workers and property owners”.

A

Communist Manifesto

KARL MARX AND FRIEDRICH ENGELS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

In spite of Marx’s criticisms, ________ theory dominated economic thinking until the end of 19th century, with influences from American, British, and French economists.

A

market-based

18
Q

Broke from classical economist because the economy shifted focus from supply and demand side of the economy.

A

NEOCLASSICAL ECONOMICS

19
Q

In neoclassical economics, the _______ of the product is not the main issue

20
Q

NEOCLASSICAL ECONOMICS

“rather than the value of good being derived from the cost of value is derived from the _____ of consumer of the product”

21
Q

Measuring the utility in economics

A

the law of diminishing marginal utility

22
Q

Mathematics began to emerge in economics

A

NEOCLASSICAL ECONOMICS

23
Q

Wrote the “Principle of economics” 1890

A

ALFRED MARSHALL

24
Q

Advent of the supply and demand diagram and the beginning of models to explain human behavior.

A

ALFRED MARSHALL

25
* The beginning of model building * Based on assumptions about rational economics behavior * Consumer and producer seen as optimizers * The movement towards “science"
NEOCLASSICAL ECONOMICS
26
British economist who proposed A General Theory of Money Interest and Employment, published in 1936.
John Maynard Keynes
27
John Maynard Keynes founded what?
macroeconomics
28
“Keynes argued that market economies do not correct itself fast enough because prices and wages take time to adapt. They proposed that during _______, the government must be involved and intervened through monetary and fiscal policies. This is to increase production and decrease unemployment, even this if it means going into debt”
economic busts
29
With the ill-effects of the Great Depression lingering, many countries have pushed for an ideology called _______, despite it being thrown around since the middle of 19th century.
socialism
30
These countries provide generously for their citizens through universal healthcare and social safety nets, they do so through heavy taxation, operating in a capitalist framework.
socialist economies
31
As socialism and Keynesian economics drove some economies, other economists persisted to push for private property and free market. The most outspoken group was the ___________
Austrian School of Economics.
32
The Austrians, _______ and ____________, argued that heavy reliance on state intervention has never produced the results it sought to accomplish, and that government interference and strict regulations create more problems than solutions.
Friedrich Hayek and Ludwig von Mises
33
They rejected nearly every idea of monetary and fiscal policy and for the Austrian School, the economy is too complex to warrant _________
government manipulation.
34
But since the government intervenes in the economy, _____ and _____ occur
booms and busts
35
As with Hayek and Von Mises, _________ promoted the privatization of many roles that the government has assumed and taken control. He was notable in proposing the deregulation of the economy.
MILTON FRIEDMAN
36
Friedman established that the failure of the response to the Great Depression was because of ________________
Keynesian economics.
37
In the 1970’s, Friedman ideas became more widespread when the US experienced very high inflation rate and low production, a __________
stagflation.
38
Stagflation became the very thing that the __________ claimed to have debunked Keynesian economics.
Chicago School of Economics
39
Friedman also built another idea from economic theory. It is called _________ It is focused on the stability of prices and recommended the slow and controlled increase of money supply to permit for consistent economic growth
monetarism.
40
Today, modern economic theory stands on the shoulders of classical economics, Friedman’s monetarism and Keynesian economics. This integrated theory is often called the _________
NEW NEOCLASSICAL SYNTHESIS
41
people who earn a wage for a living, especially people who are dependent on manual, daily, or casual labor.
Proletariats
42
those who make their living through property or through ownership of the means of production
Bourgeois