Question 1

Marginalism and the idea that pricing reflects marginal utility and demand was a movement away from:

Accepted Answer

Marginalism, which posits that prices are determined by the marginal utility of goods, marked a shift away from the labor theory of value. The labor theory of value, associated with classical economists like Adam Smith and Karl Marx, suggests that the value of a good is determined by the labor required to produce it. Marginalism focuses instead on the subjective valuation of goods by consumers.

Question 2

Explicit treatments of marginal analysis were least central to the writings of:

Accepted Answer

John Stuart Mill's work, while foundational in many respects to economics, did not focus on marginal analysis to the extent that the works of William Stanley Jevons, Léon Walras, and Carl Menger did. These three are often credited with independently developing the marginal utility theory, which is central to the concept of marginal analysis, during the late 19th century. Mill's contributions to economics were significant but predated the marginal revolution.

Question 3

The economist who spent twenty years cautiously trying out his ideas on his students before finally presenting them to the world near the close of the 19th century was: ]

Accepted Answer

Alfred Marshall is known for his significant contributions to economics, particularly for his work "Principles of Economics" published in 1890. He was meticulous in developing his theories, often testing them over many years, including on his students, before formally presenting his ideas.

Question 4

Alfred Marshall formalized and then popularized the analytical technique known as:

Accepted Answer

Alfred Marshall is best known for formalizing and popularizing the analytical technique of partial equilibrium analysis, which focuses on the equilibrium of a particular sector or market in isolation from other markets.

Question 5

Vilfredo Pareto's very deductive mathematical models and proofs made the market seem quite mechanistic, an approach most notably rejected by his slightly older contemporary:

Accepted Answer

Alfred Marshall rejected the mechanistic view of markets, emphasizing the importance of human behavior and psychological factors in economics, contrasting with Pareto's more mathematical and mechanistic approach.

Question 6

The economic theorist who most vociferously opposed using "all else assumed constant" [ceteris paribus] assumptions when building theory was:

Accepted Answer

The answer of The economic theorist who most vociferously opposed...

Question 7

The Lausanne School is to Léon Walras as the Austrian School is to:

Accepted Answer

Carl Menger is considered the founder of the Austrian School of economics, similar to how Léon Walras is associated with the Lausanne School.

Question 8

The idea that governmental redistributions of income or wealth will ultimately have no effect on how disparate income and wealth are distributed is sometimes called:

Accepted Answer

Pareto's law, or the Pareto principle, is often interpreted in economics to suggest that a small percentage of the population will inevitably hold a large proportion of the wealth, regardless of governmental redistribution efforts. This principle suggests that efforts to redistribute wealth or income will ultimately not change the fundamental distribution pattern, where a small number of people control a large portion of the resources.

Question 9

Which of the following is not among Rostow's stages of growth

Accepted Answer

Rostow's stages of growth do not include "the age of low mass consumption." This term is not one of the stages outlined by Rostow. His model includes stages like the traditional society, the preconditions for take-off, the take-off, the drive to maturity, and the age of high mass consumption.

Question 10

Which of the following is the nucleus of the Keynesian theory of employment?

Accepted Answer

The principle of effective demand is at the core of Keynesian theory, which posits that the level of employment is determined by the aggregate demand in the economy, not by the price of labor as classical theory suggested.

Question 11

The study of the effect of consumption on investment is called

Accepted Answer

The accelerator principle or effect in economics refers to the positive effect that an increase in national income (and thereby consumption) has on investment spending. It suggests that an increase in consumption can lead to an increase in investment as businesses invest more to meet the increased demand.

Question 12

Who among the following was the leader of Monetarism

Accepted Answer

Milton Friedman was the leader of Monetarism, advocating for the control of the money supply to manage inflation and economic stability.

Question 13

The multiplier is the reciprocal of

Accepted Answer

The multiplier is the reciprocal of the marginal propensity to save (MPS). This is because the multiplier effect in economics is determined by the formula 1/MPS, indicating how initial changes in spending lead to further changes in income and spending throughout the economy.

Question 14

The mew classical economics is based on

Accepted Answer

The new classical economics is based on the concept of market clearing, which posits that markets are always in equilibrium or moving toward it, meaning prices and quantities adjust to ensure that supply equals demand.

Question 15

The welfare of all means:

Accepted Answer

Sarvodaya is a term meaning 'universal uplift' or 'progress of all'. It was used by Mahatma Gandhi as a title for his 1908 translation of John Ruskin's tract on political economy, "Unto This Last", and Gandhi came to use the term for the ideal of his own political philosophy.

Question 16

The desire of people to keep money with them is called by Keynes as:

Accepted Answer

The term "liquidity preference" is used by Keynes to describe the desire of people to hold onto their money rather than investing or spending it. This concept is central to his theory on interest rates, where he argues that the interest rate is determined by the supply and demand for money, with liquidity preference influencing the demand side.

Question 17

According to Keynes marginal efficiency of capital has a tendency to :

Accepted Answer

The marginal efficiency of capital tends to decrease according to Keynes, primarily because as more capital is accumulated, the returns on additional investments are likely to be lower.

Question 18

The change in income as a result of change in is investment called by Keynes as:

Accepted Answer

The concept referred to by Keynes as the change in income as a result of change in investment is known as the "multiplier." The multiplier effect explains how an initial change in spending (such as an increase in investment) leads to a larger change in income and hence aggregate demand, primarily through a cycle of re-spending of the initial stimulus.

Question 19

Marginal efficiency of capital is :

Accepted Answer

Marginal efficiency of capital refers to the expected rate of profit from new investment. It is a concept used in economics to describe the profitability of investing in additional units of capital, such as machinery or buildings, and is crucial for understanding investment decisions.

Question 20

Keynes theory of employment relates to:

Accepted Answer

Keynes' theory of employment is primarily concerned with the short run, focusing on how economic output and employment levels are determined by aggregate demand in the short term.

Quiz 2: Economic Thories and Thinkers