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78 views6 pages

Quiz 2 (Ucla) 3

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head.strongliu
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ECON XL 2

Principles of Economics: Macroeconomics


Professor Daron O. Djerdjian

Quiz 2
“History of Economic Schools of Thought”

7 points

Name: ______________________
I. Multiple-Choice Questions (1/2 point each)

1. Which economic phenomenon, observed in the late 18th century,


significantly influenced Adam Smith's concept of the "invisible hand" and the
development of Classical economic thought?

a) The rapid growth of international trade and specialization

b) The implementation of the gold standard monetary system

c) The development of early computing machines for economic calculations

d) The rise of labor unions and collective bargaining

2. The concept of "marginal analysis" in economics refers to:

a) The study of economic margins or boundaries

b) The examination of total costs and benefits

c) The focus on decision-making based on additional units

d) The analysis of average production costs

3. According to the subjective theory of value:

a) The value of a good is determined by the labor required to produce it

b) Consumers determine the value of a good based on its marginal utility

c) The government sets prices for all goods and services

d) The value of a good is always equal to its cost of production


4. The Marginalist Revolution's contribution to resolving the diamond-
water paradox primarily involved:

a) Proving that water is more valuable than diamonds in all circumstances

b) Demonstrating that labor costs determine the relative values of goods

c) Introducing the concept of diminishing returns to scale in production

d) Explaining how total utility differs from the utility of additional units
consumed

5. Karl Marx's theory of surplus value suggests that:

a) Workers receive the full value of their labor

b) Capitalists appropriate the difference between the value produced by


labor and wages paid

c) Surplus value is equally distributed among all members of society

d) There is no exploitation in capitalist systems

6. Which of the following ideas is LEAST consistent with Classical


economic thought?

a) The "invisible hand" mechanism efficiently allocates resources in a free


market

b) Say's Law, which states that “supply creates its own demand”

c) The quantity theory of money, which relates money supply to price levels

d) The idea that government intervention is necessary to achieve full


employment
7. The concept of "neutrality of money" in classical economics implies
that:

a) Changes in the money supply affect real economic variables in the long
run

b) Changes in the money supply only affect nominal variables in the long
run

c) Money has no impact on the economy whatsoever

d) The central bank should not exist

8. The main critique of the labor theory of value is that it:

a) Over-emphasizes the role of capital in production

b) Fails to explain the high value of certain goods with low labor input

c) Ignores the role of supply and demand in price determination

d) All of the above


II. Essay Question (2 points)

Imagine that you are a time-traveling economics student who can attend a lecture

by either Adam Smith, Karl Marx, or Carl Menger. Which economist would you

choose and why?

In your answer:

1. Briefly describe the key ideas of your chosen economist.

2. Explain how these ideas influenced the development of economic thought.

3. Discuss how your chosen economist's theories explain the determination of

value and prices in a market economy.


III. Short-Answer Question (1 point)

Explain the concept of "marginal utility" as developed by the Marginalist school.

How did this idea challenge the Classical school's labor theory of value, and what

implications did it have for understanding consumer behavior and demand?

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