Quiz Questions

Bold = True HE History People

Quiz 1

Which of the following statement/s is/are true, given Smith’s discussion on wage levels?

• political and institutional circumstances play only a minor role in explaining wage levels.
  • smith writes on respect, education, the harder the work, the more money you should got
• In case of a conflict, workers are usually in a more powerful bargaining position than employer.
  • no economist has said that
• **the wage level of different professions is affected by different noneconomic factors.
  • opposite to first statement
  • todo
• **In the long run, wages have to be high enough for workers to raise a family.
  • subsistence+ theory → feed yourself + family

According to Malthus’ theory of population growth and food supply:

• Advances in technology eliminate the threat of overpopulation.
  • smith, not malthus
• **There exists a constant tension between population growth and food supply.
• **When unchecked, population grows geometrically, while food supply increases arithmetically.
• Returns to scale are increasing in agriculture.

Against the backdrop of Ricardo’s theory of comparative advantage, consider two countries, A and B, that both produce bicycles and tablets. Given that there are no transaction costs, which of the following statement/s is/are definitely correct?

• Country B should focus on producing bicycles if it produces them faster than tablets.
• **Countries maximize their combined output by specializing in the production of goods for which they have a comparative advantage.
  • CCBE content
• **If relative efficiencies in producing the two goods differ among the countries, trade is beneficial, even if one country is more efficient at producing both in absolute numbers.
  • CCBE content
• Country A cannot gain from trading with Country B if it is more efficient at making both tablets and bicycles.

Adam Smith’s distinction between “value in use” and “value in exchange” highlights a paradox. Which of the following statement/s is/are correct?

• Smith’s labor theory of value is able to resolve the paradox.
• **Diamonds, although less useful than water, have a higher exchange value.
• **The paradox illustrates a weakness in classical price theory by failing to provide an adequate account of demand.
• Water has a higher exchange value than diamonds due to its necessity.

In Adam Smith’s example of a primitive society with free access to hunting grounds, what is/are the key determinant(s) of the exchange ratio between a beaver and a deer?

• The number of hunters in society.
• The quantity of capital employed in hunting each animal.
• The demand for each type of animal.
• **The relative amount of labor required to hunt each animal.
  • no time, knowledge, effort, skills, etc. Just labor hours considered
  • ricardo started thinking about more than labor hours

Which of the following statement/s about Ricardo’s theories on taxation and loan financing is/are correct?

• **Taxation and loan financing of public expenditure are economically equivalent, meaning that citizens bear the same overall financial burden in either case.
  • e.g. financing a war, tax and loans are the same - just the amount is relevant
  • more “honest” to work with taxation rather than loan financing
• Loan financing is generally preferable to taxation because it avoids imposing immediate costs on taxpayers.
• **When the government finances its spending through loans, taxpayers feel richer in the short term due to lower immediate tax payments.
  • loans push back the date of population paying taxes backwards
• The burden of taxation can be shared between producers and consumers, depending on market conditions.
  • generally true, just not from ricardo

Which of these statement/s is/are true regarding Smith’s stances on competition and free trade?

• **Smith was in support of protectionist measures when it comes to goods of strategic value for defence.
  • in general for free trade, but still patriotic
• Competitive markets by definition lead to just societal outcomes.
• In general, he was an advocate of Mercantilist policies, and restricting international trade.
• Systems of free markets and free competition are inherently self-regulating.
  • comes up later, “inherently” is too strong - “tend to” would fit better

Which of the following factors can control population growth according to Malthus?

• **Positive checks like famine, disease, and war.
• **Preventive checks such as moral restraint, delayed marriage, and celibacy.
• Economic policies that redistribute resources.
• Government regulations ensuring equal access to food for all.

As outlined by Smith, which of these parameters play(s) a role in co-determining the unit cost of production in complex societies?

• **the scale of production
• **the organisation of labor
• **the market size
  • necessary for specialization
• **the level of specialization

Which of the following statement/s is/are true regarding Smith’s distinction between “natural price” and “market price”?

• **The natural price is stable, representing the level to which market prices continually gravitate.
• Over long periods, the market price is more likely to stay below the natural price than above.
• In competitive markets, market price and natural price always remain the same.
• **The Market price fluctuates based on immediate supply and demand conditions.
  • he didn’t take demand into account, but it is still correct

Quiz 2

Which of the following statements about the industrial revolution is/are correct?

• **The Industrial Revolution led to the formation of economic core-periphery patterns.
• René Descartes’ theories on practical experimentation were a primary influence on the technological advancements of the British Industrial Revolution.
• The beginning of the Industrial Revolution was marked by a transition from water transport to railway transport.
• **Technological advancements in the textile industry were central to early industrial growth in Britain.

Which of the following statements about imperialism is/are correct?

• **The British Empire expanded significantly, controlling a larger proportion of the Earth’s surface by 1914 than by 1815.
• **European countries aggressively sought exclusive access to markets and raw materials after 1800.
• **Internal imperialism in the US involved the conquest of territories from indigenous populations.
• The United States played a leading role in the division of Africa among European powers in the late 19th century.

Which of the following factors contributed to lower transaction costs during the 19th century?

• Frequent currency devaluations to boost exports.
• **Improvements in transportation technology, like steamships and railways.
• **Reduction of import duties (tariffs) and other political barriers to trade in many countries.
• **The adoption of the gold standard, providing stable exchange rates.

Which of the following statements accurately describe/s factors that influence price ratios between countries?

• **High transportation costs are one reason that prices for the same commodity might not become identical across
• **Japan serves as an example of gradual economic opening, resulting in steady price changes over time.
• When countries start to trade, the price of net exported goods tends to rise, while the price of net imported goods decreases.
• According to the ‘weak law of one price’, prices should be identical across all locations.
  • “law of one price” would be correct

Which of the following statements is/are correct?

• The Industrial Revolution resulted in a larger workforce in the primary sector.
• The Industrial Revolution occurred swiftly and rapidly spread throughout Europe.
• The “industrious revolution” refers to a shift toward reduced consumption and increased savings.
• **The use of coal as a primary energy source grew significantly during the Industrial Revolution.

Which of the following statements about the factory system is/are correct?

• **It contributed to greater alienation of labor.
• The emergence of factory towns directly improved living conditions and sanitation for workers.
• It led to a unification of the workplace and home.
• **It increased the importance of time management.

Which of the following statements concerning international price and trade dynamics in the 19th century is/are correct?

• **According to the weak law of one price, prices may not be identical but tend to move in the same direction across different regions.
• “Peripheral” countries in the global economy did not really engage in economic specialization.
  • you can also specialize in agriculture
• **Japan provides an interesting example, as it shifted from autarky to trade, allowing us to observe the direct impact of trade on prices
• **Rates of return on investments were often higher in the “peripheral” than in the “core” countries of the emerging world economy
  • real estate is free if you rob it from the locals!

Which of the following statements about the industrial revolution is/are correct?

• **The “industrious revolution” saw households increase their working hours to afford new consumer goods like tea and sugar.
• France was the first country to industrialize, quickly followed by Britain.
• The productivity of services grew faster than that of industry.
• **The rise of industrial factories reduced the need for skilled artisans, shifting production to unskilled or semi-skilled

Which of the following best describes the purpose of the gold standard during the 19th century?

• **To create stable exchange rates for international trade and reduce transaction costs.

• To ensure countries could use monetary policy to mitigate the ups and downs of the business cycle.
  • gold standard reduces monetary policy freedom
• To replace commodity money with paper currency.
  • coincidence - not the reason for it
• To allow currency values to fluctuate freely between countries.

Which of the following statements about the early Industrial Revolution is/are correct?

• The invention of railways was crucial in the early phase of the British Industrial Revolution.
• **Innovation and organizational changes were more critical for labour productivity growth than the increase in the capital/labor ratio.
• The industrial revolution advanced slowly because strong workers’ associations (labor unions) impeded structural change.
• **The “Glorious Revolution” led to better protected and enforceable property rights.

Quiz 3

Which of the following statements regarding Pigou’s theories is/are correct?

• **Pigou believed practical conclusions could be derived from utility analysis.
  • thought about society - practical applications - pigouvian taxes
  • learned about it in micro
• **Pigouvian taxes are designed to address overproduction of goods with negative externalities.
  • internalize externalities → socio
• **Pigou argued that in perfectly competitive markets, full employment would be achieved.
• Pigou argued that in perfectly competitive markets, full employment would be achieved

As Pigou later changed his opinion, the last answer is somewhat ambiguous, so we let both T & F count. Consider a consumer choosing between footballs and ice creams. Which of the following statements align/s with marginalist principles in the optimum?

• Only for cardinal utilitarians a higher-priced football must yield proportionally more utility than an ice cream in the optimum.
  • tying your utility to a specific number to calculate stuff
• **If a football costs seven times as much as an ice cream, an additional football should provide seven times the pleasure of an additional ice cream.
• For ordinal utilitarians, the increase in utility from being able to buy more of both goods can be measured.
  • as long as the ordinality does not change it is not measurable
• **Both cardinal and ordinal utilitarians would view a higher indifference curve, with more footballs and ice creams, as a state of higher utility.
  • ordinal has similar curves - but without the numbers

Here, due to the possibility of more complex interpretations than intended, we gave additional 0.25 points

Which of the following statements about Alfred Marshall’s economic approach is/are correct?

• Marshall was only concerned with the modelling of short-term market equilibria.
• **Marshall developed partial equilibrium analysis to examine individual markets independently.
  • Marshall … guy who does everything
• Marshall viewed economics as a collection of true statements forming a representation of the world, and he advocated that economists should continuously inform the public about these truths.
  • it’s not a collection of truths - rather a good toolset to solve a lot of problems
• Marshall argued that economic insights could only be obtained by using pure mathematical modelling.
  • just the “only” makes this statement wrong

Which of the following statements regarding utility and indifference curves is/are correct?

• Utilitarians might argue that individuals with the greatest capacity for work should perform the majority of it.
• Edgeworth argued that the marginal utility of income increases as income rises.
  • decreases
• **An indifference curve represents combinations of goods yielding a constant level of utility for consumers.
• According to Edgeworth, utility can be interpreted to a degree that makes it a meaningful concept.
  • todo idk

Which of the following statements about equilibrium concepts in economic theory is/are correct?

• **In Walras tâtonnement process, the economy reaches equilibrium through trial and error adjustments.
  • Walras … mathematician, scarcity, models, proving equilibriums exist
• Menger did not assume that markets were always in equilibrium. He saw competition as a dynamic process that worked to eliminate monopolies.
• Jevons formulated equilibrium conditions for multiple markets simultaneously.
  • true for Walras, false for Jevons
  • Jevons less obsessed with maths, utilitarian, maximizing utility
• **The existence problem of equilibrium examines whether a set of prices and quantities exists that satisfy all equations in an economic model.

Which of the following statements regarding Pareto’s ideas are correct?

• Pareto assigned numbers to indifference curves to compare utility between individuals.

• **Pareto believed that the numbers assigned to indifference curves are not important, as long as they increase with the level of preference.
  • zero-sum game → game theory
  • Pareto … ordinal, edgeworth … cardinal

• There can only be one possible Pareto-optimal allocation in society.
• Pareto argued that his theory supports a capitalist model of production.

In a society consisting of one wealthy person and one poor person, which of the following statements is/are correct

• This cannot be considered Pareto-efficient.
• **Edgeworth would advocate redistributing wealth to increase total utility.
• Pigou would argue that economists should avoid moral questions on wealth distribution.
  • thought of society - would not avoid morals
  • progress of utilitarians → from mere individuals to populations
• According to ordinal utility theory, reducing the wealth of the wealthier person would not impact their utility.
  • it would impact - but less than lowering the wealth of the poor person

Which of the following statements about Menger’s and Marshall’s concepts is/are correct?

• **According to Menger, value is inherently tied to a good’s ability to satisfy human needs.
  • marginalist … demand side only, value = utility → satisfying
• In Marshall’s economics, in the long-run supply of a good is fixed, as there is a limited stock of land, skilled labour and machinery.
  • marshall cross … supply and demand diagram
• Marshall strongly advocated for mathematical models even if they defy translation into ordinary language.
• **Menger argued that consumer utility maximization ensures the maintenance of market equilibrium.

Which of the following statements about utility concepts and their implications as explained in the text for week 5 is/are correct?

• **According to Edgeworth, in principle an equal distribution of income creates optimal social welfare.
  • something about diversification
• **An indifference curve represents combinations of goods at which consumer utility remains constant.
• Exact utilitarianism argues that utility can neither be measured nor compared across individuals, and thus a term like “maximum utility” is misleading.
• **Pareto’s concept of utility is ordinal, while Edgeworth’s is cardinal.

Which of the following statements reflect/s marginalist views on consumer decision-making?

• Consumers maximize utility by allocating their budget to equalize the marginal utility per dollar spent across all goods.
• The value of a good is determined primarily by the labor hours dedicated to producing it.
• **In an exchange, the relative utility derived from goods should match their relative prices.
• The marginal utility of a good increases with each additional unit consumed.

Quiz 4

Which of the following phenomena arose with the economic developments from the 1980s on?

• Global poverty rates stagnated or increased.
  • CCBE → decreased
• **Banking crises became more frequent.
  • more common with smaller economies
  • graph on the slides
• **In richer countries, a greater share of income went to the top 1%.
• Overall global resource use and greenhouse gas emissions declined due to the transition to more service-oriented economies.
  • they never declined

Which of the following statements is/are correct?

• The period from WW1 to the end of WW2 saw particularly high economic growth rates, due to increased spendings on war.
  • the fuel for starting WW2 - pointing fingers at a poor economy
  • hyperinflation, great depression
• The Spanish flu happening shortly after WW2, exacerbated its aftermath’s challenges and damages.
  • after WW1 - not WW2
• Economic involvement by the state declined significantly during WW1.
• **Economic and political relations were rather non-cooperative in the aftermath of WW1 due frictions regarding reparation payments and war debts.

Which of the following statements is/are true for WW2 recovery?

• Free international capital flows were significant for recovery, and an essential part of the Bretton Woods system.
  • there was only trade - not capital flow, trading only goods, not currency
• **European cooperation increased after WW2.
• **The Bretton Woods system increased monetary autonomy for countries.
  • USD was fixed to gold → exchanges to USD were not fixed
• Germany’s inability to pay reparations after World War I led directly to higher reparations after World War II, as the Allies sought to punish it further.
  • Allies learned their lesson - cooperation and control after WW2

Which of the following statements is/are correct?

• The return to the gold standard proved very effective as a sustainable solution to the problems arising in the aftermath of WW1
• **Trust and cooperation are crucial for the functioning of the gold standard.
  • gold standard … gentlemens agreement
• Overvalued or undervalued gold parities had no impact on economies under the interwar gold standard
• **The gold standard caused central banks to seek excessive monetary expansion in the interwar period.

Which of the following statements is/are correct?

• **Leaving the gold standard helped fight deflationary pressures in the 1930s.
• Leaving the gold standard was essential to combat the particularly high inflation of the 1930s.
• **US investments had an influence on German reparation payments after WW1.
• The stock market crash caused an immediate depression in the real economy.
  • it was not immediate, took 2-3 years to cause depression

Which of the following statements is/are true for the post-1980 globalization wave?

• Foreign direct investment in African countries declined, increasing their sovereignty.
• International financial markets became less integrated over the period as a consequence of repeated crises.
• Traditionally ‘peripherical’ countries became even more reliant on exporting primary products.
  • moving to industry more - some countries not a lot but still moving
• **Production processes became more spread out globally.

Which of the following statements about monetarism is/are true?

• John Maynard Keynes was a leading figure in monetarism.
• **Monetarists primarily blamed central bank policies for stagflation.
  • monetarists (friedman) …
• **Monetarist views led to increased deregulation and privatization.
• They believe central banks should have pursued more expansionary policies during crises.
  • more contractionary policy → demand shock → inflation

Which of the following contributed to the end of the Golden Age and slower economic growth?

• **The 1973 oil crisis.
• Deflation and economic stagnation, known as “stagflation.”
  • stagnation + inflation
• **The completion of structural changes and technological catch-up.
• **US inflation during the Vietnam War, posing problems for the Bretton Woods system.
  • bretton woods → fixing currencies to USD, if USD has problems the others have it too

Which of the following statements about the Golden Age (1950-1973) is/are correct?

• **International finance played a minor role during the Golden Age.
• The Peoples Republic of China experienced significantly higher growth rates than the US during this period.
• **The Golden Age saw high growth rates in Western Europe and Japan.
  • second unbundling
• Trade protectionism increased during the Golden Age.

Which of the following factors contributed to Western Europe and Japan converging with the US after WW2?

• The liberalization of capital markets.
  • only about goods markets → only after 1973
• **Adoption of technology and organizational change from the US.
• **Increasing industrialization.
  • factory management, cost efficiency,
• **Stronger integration of European markets.

Quiz 5

Which of the following statements about Ludwig von Mises and Oskar Lange is/are correct?

• **Lange expressed gratitude for Mises’ critique of socialist central planning and proposed to erect a statue in his honour in any socialist planning board.
  • ironic statue
• **Lange argued that market-socialism, excluding private ownership, could allocate resources more efficiently than free markets by eliminating the influence of market power.
• **Mises emphasized the importance of prices in resource allocation.
  • mises … critique of socialism
• Mises argued that a slow transition to socialism would be the inevitable result of bureaucratization of private enterprise and the decline of the entrepreneurial spirit in society.
  • “inevitable” is the problem, it might - but does not have to

Which of the following statements accurately describe/s the period of Stalin’s rule in the USSR?

• Little to no emphasis was placed on capital accumulation to foster economic development.
• **The first Five-Year-Plan was introduced.
• **Internal criticism was repressed by force.
• The economic system under Stalin relied heavily on market price systems as envisaged by Oskar Lange.

Which of the following statements reflect/s key aspects of the USSR and other socialist states in their later years?

• The eastern bloc, with the exception of Romania, managed to lower its debt significantly in the 1980s.
• The USSR shifted rapidly to a service-sector economy, which reduced overall output.
• **The USSR struggled to produce efficiently and had to rely on extensive rather than intensive growth.
  • more money demand than technological innovation
  • building a lot of tanks, not good tanks
• **According to some, central planners in the USSR chose unrealistic or incoherent goals that hindered economic progress.

Which of the following statements accurately describe/s Friedrich Hayek’s views?

• He believed the creation of the right incentives, free from profit-seeking or greed, is an advantage of socialist systems.
• According to Hayek, resource allocation should be managed by central planners or mathematicians.
• **He saw prices as an important carrier of information.
  • Hayek … full on capitalist, anti-Marx
• His work reflects a strong antithesis to the views of his former teacher, Mises.

Which of the following statements about Marx and his theory is/are correct?

• For Marx, use value and price are always equivalent in a capitalist economy.
• **Marx viewed class struggle as a central driving force of historical change.
• **Marx believed that labor is the central factor in determining the value of commodities.
• **Marx argued that capital accumulation would eventually lead to crises and capitalism’s downfall.

Which of the following statements describe/s Oskar Lange and Abba P. Lerner’s approach to economic planning?

• Lange acknowledged that his market-socialist system might suffer from bureaucracy.
• According to Lange, a central planning bureau can use a trial-and-error process to simulate and even outperform free markets in terms of efficiency.
• **In Lange’s system, state-owned enterprises would try to maximise profit based on prices set by the central planning bureau.
  • todo like a hybrid - regulate just prices and let supply take care of it’s own
• Socialist economies should disregard prices entirely and focus on production targets.

Which of the following statements accurately describe/s developments under Stalin’s rule in the USSR?

• Stalin employed market incentives to convince peasants to take part in the collectivization of agriculture.
• **The period was characterized by repression and severe humanitarian and political abuses.
• **Structural change from agriculture to industry took place.
• Stalin’s industrialization policies transformed the Soviet Union into a modern industrial powerhouse without significant social costs.

Which of the following statement/s capture/s Joseph Schumpeter’s views on economic systems?

• **Schumpeter outlined the tendencies of capitalist systems becoming overly bureaucratic.
  • evolutionary theory of markets
  • for good things to come bad things have to die
• **Schumpeter viewed markets as constantly evolving, rather than remaining in stable equilibrium.
• **Creative destruction describes how innovations replace outdated industries.
• **Schumpeter argued that capitalism’s dynamics would eventually lead to socialism.
  • doesn’t want bureaucracy, but he knows it is necessary

Which of the following statements accurately describe/s early socialist ideas?

• Marx was a strong proponent of the marginalist theory of value.
  • marginalist theory of value … demand, but Marx is supply side
• Marx advocated a shift from “to each according to his needs” to “each according to his ability.”
  • “you’re gonna work the job you are good at”
  • problem is “shift from” → adding would be more appropriate
    • “to each according to his needs” are still applicable
• Left Revisionism, associated with Lenin and Trotsky, strongly advocates reform rather than revolution.
• **Marx and Engels argued that for communism to prevail, there would need to be material conditions from advanced capitalism.
  • “if capitalism continues like this there will be revolution”
    • the “like this” is the “material condition”
  • enough people have to be mad at capitalist for communism to work
  • communist virus needs to spread first

Which of the following statements about Friedrich (von) Hayek’s views on knowledge and preferences relevant for economic decision-making is/are correct?

• For Hayek, a central planning bureau could achieve market-like outcomes by collecting and using individual knowledge and preferences, and managing resources based on them.
• **They can be communicated indirectly through markets via price signals, which reflect them.
• **They are best understood as widely dispersed among individuals and influenced by individual and local contexts and circumstances.
• **No single individual or authority can fully aggregate and understand all of them.