History of Economic Thought Multiple Choice Questions
1. Which of the following is NOT an economic theory of Ricardo’s discussed in this article?
A. Economic Rent
B. Comparative Advantage
C. Division of Labor
D. All of the concepts listedcan be contributed
Answer: C.Division of Labor
2. The concept Industrial Reserve Army is introduced by
A. Turgot
B. Karl Marx
C. Joan Robinson
D. J.S. Mill
Answer: B.Karl Marx
3. Who gives a welfare definition of economics?
A. Adam Smith
B. Alfred Marshall
C. Lionel Robbins
D. Paul Samuelson
Answer: B.Alfred Marshall
4. According to Ricardo, as an economy grows, the are the only group that would benefit.
A. Workers
B. Land-owners
C. Businessmen
D. None of the above
Answer: B.Land-owners
5. The type of equilibirium that deals with the determination of price and quantity of only one
A. General equilibrium
B. Partial equilibrium
C. Zero Equilibrium
D. Pareto efficiency
Answer: A.General equilibrium
6. Adam Smith begins with the Wealth of Nations with an example of a pin factory in order to
A. the accumulation of capital
B. the division of labor
C. the perils of government
D. All of the above
Answer: B.the division of labor
7. The Classical theory did not provide any coherent theory of ——
A. Income distribution
B. Rent Thoery
C. Labor value theory
D. Profit
Answer: D.Profit
8. In Case the supply of a factor of production is fixed , its entire income will be —–
A. Economic Rent
B. Marginal rent
C. Rent
D. Profit
Answer: A.Economic Rent
9. According to Adam Smith , employers earned profits due to ———-used by them
A. Land
B. Labor
C. Capital
D. Enterpreuer
Answer: C.Capital
10. According the law of diminishing returns:
A. The marginal product of a variable factor
B. Marginal utility falls as more units of a product are consumed
C. The total product falls as more units of a variable factor
D. The marginal product eventually increases as more
Answer: A.The marginal product of a variable factor
11. Communist Manifesto was authored by:
A. Stalin
B. Karl Marx
C. Laski
D. George Bernard Shah
Answer: B.Karl Marx
12. For the classical economists, the quantity theory of money provided an explanation of movements in the price level. Movements in the price level result
A. solely from changes in the quantity of money
B. primarily from changes in the quantity of money
C. only partially from changes in the quantity of money
D. from changes in factors other than the quantity of money
Answer: A.solely from changes in the quantity of money
13. The book Principles of Economics was published in the year
A. 1776
B. 1932
C. 1890
D. 1936
Answer: C.1890
14. The classical economists believed that if the quantity of money doubled,
A. output would double.
B. prices would fall
C. prices would double
D. prices would remain constant
Answer: C.prices would double
15. The main focus of Karl Marx’s work was on which of the following social elements?
A. The plight of the working class
B. Economics of the upper class
C. Workers conditions in factories
D. Gender equality
Answer: C.Workers conditions in factories
16. Which two philosophers developed the principal concept of Marxism?
A. Marx and Engels
B. Marx and Aristotle
C. Marx and Adam
D. Plato and Aristotle
Answer: A.Marx and Engels
17. Walras’ law implies that if there are N markets, we only need to find equilibrium prices in
A. N-1 markets.
B. N-2 markets.
C. all markets
D. N-3 markets
Answer: A.N-1 markets.
18. The Fisher effect .
A. States that nominal interest rates are equal to the real interest rates plus the expected inflation rate
B. States that nominal interest rates are equal to real interest rates minus the expected inflation rate
C. Predicts that as the expected inflation rate rises, so do nominal interest rates
D. Predicts that as the expected inflation rate rises, real interest rates fall
Answer: C.Predicts that as the expected inflation rate rises, so do nominal interest rates
19. If you want a 4% real interest rate and the expected inflation rate is 3%, you should set the
A. 1%
B. 4%
C. 7%
D. 20%
Answer: C.7%
20. The average number of times that a dollar is spent in buying the total amount of final goods and
A. gross national product
B. the spending multiplier
C. the money multiplier.
D. Velocity
Answer: D.Velocity
21. Adam Smith begins with the Wealth of Nations with an example of a pin factory in order to
A. the accumulation of capital
B. the division of labor
C. the perils of governmentregulation
D. All of the above
Answer: B.the division of labor
22. Ricardo Theory Of Rent is based on —— reasoning
A. Deductive
B. Empirical
C. illogical
D. Inductive
Answer: A.Deductive
23. According to Ricardo, as an economy grows, the are the only group that would benefit.
A. Workers
B. Land-owners
C. Bussiness Man
D. None of the above
Answer: B.Land-owners
24. According the law of diminishing returns:
A. The marginal product of a variable factor eventually falls as more units of it are added to a fixed factor
B. Marginal utility falls as more units of a product are consumed
C. The total product falls as more units of a variable factor are added to a fixed factor
D. The marginal product eventually increases as more units of a variable factor are added to a fixed factor
Answer: A.The marginal product of a variable factor eventually falls as more units of it are added to a fixed factor
25. The quantity theory of money is expressed by the identity equation
A. MV/PY
B. MV=Y
C. M= PYV
D. MV=PY
Answer: D.MV=PY
26. Both sides of the quantity theory of money identity represent . *
A. Real GDP
B. Inflation.
C. Nominal GDP.
D. The Money Supply.
Answer: C.Nominal GDP.
27. In the quantity theory of money, P and Y represent the price and quantity of:
A. all raw materials and natural resources sold in an economy
B. all financial services sold in an economy.
C. all durable capital (tractors, manufacturing equipment) purchased in the economy
D. all finished goods and services sold in an economy
Answer: D.all finished goods and services sold in an economy
28. Nominal GDP in terms of is represented by how much money there is and how many times it is spent, while Nominal GDP in terms of is represented by all goods and services and their prices.
A. buyers & sellers
B. domestic production& international production
C. profit & loss
D. imports & exports
Answer: A.buyers & sellers
29. Say’s law states that
A. we can have an inflation or recession, but never both at the same time
B. the normal state of economic affairs is recession
C. demand creates its own supply
D. supply creates its own demand
Answer: D.supply creates its own demand
30. Adam Smith in his book, The Wealth of Nations, developed a theory about:
A. communism
B. capitalism
C. regulating foreign investment
D. ensuring internal order
Answer: B.capitalism