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1 | |
Mercantilism refers to |
| | A) | a collection of economic philosophies prevalent in the nineteenth century. |
| | B) | an economic philosophy favoring minimalist government. |
| | C) | an economic philosophy that encouraged colonialism. |
| | D) | all of the above. |
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2 | |
Mercantilists believed |
| | A) | that trade is a positive-sum game. |
| | B) | in the labor theory of value. |
| | C) | countries should maintain a trade surplus. |
| | D) | all of the above |
| | E) | b and c. |
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3 | |
To a mercantilist, the government should |
| | A) | stay out of the management of the economy. |
| | B) | engage in bullionism. |
| | C) | encourage importation, as this is a sign of national wealth. |
| | D) | avoid having colonies, as this is a draw on national resources. |
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4 | |
The British Navigation Acts of the eighteenth century |
| | A) | were examples of mercantilist policies. |
| | B) | excluded, for example, Spanish ships, from trading with the coastal American colonies. |
| | C) | were intended to maximize the flow of specie into Britain. |
| | D) | did all of the above. |
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5 | |
The observation that, over time, a trade surplus leads to a net gain in a country's holdings of precious metals, is |
| | A) | inconsistent with mercantilism. |
| | B) | consistent with Hume's price-specie-flow mechanism. |
| | C) | inconsistent with Hume's price-specie-flow mechanism. |
| | D) | none of the above. |
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6 | |
The notion of absolute advantage |
| | A) | was an important early critique of mercantilism. |
| | B) | was original to mercantilist thinking. |
| | C) | is central to the price-specie flow mechanism. |
| | D) | was originally conceptualized by David Hume. |
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7 | |
A "laissez faire" philosophy implies |
| | A) | a substantial amount of government intervention in the economy. |
| | B) | government holdings of gold and silver are the ultimate measures of the size of the economy. |
| | C) | that self-interest is the path to economic ruin. |
| | D) | governments should maintain law and order and protect property rights, but not much else. |
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8 | |
The labor theory of value is the |
| | A) | notion that trade can be a positive-sum game. |
| | B) | idea that laborers in a mercantilist society should be paid as little as possible. |
| | C) | idea that goods and services can be valued according to their relative labor content. |
| | D) | essence of the quantity theory of money. |
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9 | |
Consider the following table showing labor requirements per unit of production: | Country | Fine Crystal | Apricots | | Armenia | 3 hrs/unit | 15 hrs/unit | | Uzbekistan | 4 hrs/ unit | 10 hrs/unit |
According to Adam Smith's way of thinking, fine crystal should be exported by_________; apricots should be exported by __________. |
| | A) | Armenia; Uzbekistan |
| | B) | Armenia; Armenia |
| | C) | Uzbekistan; Armenia |
| | D) | Uzbekistan; Uzbekistan |
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10 | |
Consider the following table showing labor requirements per unit of production: | Country | Steel | Plantains | | Uruguay | 16 hrs/unit | 8 hrs/unit | | Brazil | 15 hrs/ unit | 4 hrs/unit |
According to Adam Smith, |
| | A) | Uruguay has the absolute advantage in steel production. |
| | B) | Brazil has the absolute advantage in neither steel nor plantain production. |
| | C) | trade would not be mutually advantageous. |
| | D) | plantains will not be produced, since productivity levels in steel production are substantially higher. |
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