Review Questions for Midterm 1
Economics 493/593
Fall 2007
1. Why does the book choose to begin the study of the evolution of economic thought around the year 1500?
2. What factors were important in the transition from feudalism to capitalism? Discuss each factor.
3. Discuss the main features and policies associated with mercantilism.
4. Why did the mercantilists focus on exchange as the source of wealth? What was the role of the government under mercantilism?
5. What was Thomas Mun's major contribution to mercantilist ideas?
6. Discuss the ideas and contributions of Sir William Petty.
7. Discuss the ideas and contributions of Bernard Mandeville.
8. Discuss the ideas and contributions of Richard Cantillon and David Hume.
9. Who were the Physiocrats? What policies did they advocate, and what problems did their policies address?
10. Discuss the ideas and contributions of Francois Quesnay. Explain Quesnay's Tableau Economique. Why is the table important in the history of economic thought?
11. Discuss the ideas and contributions of Anne Robert Turgot. Why was Turgot dismissed from his duties as finance minister in 1776?
12. According to Adam Smith, what are the four stages of economic and social development? What are the characteristics of each stage? How did the progression through the stages illustrate the invisible hand at work?
13. What is the role of the state according to Adam Smith? What makes for good taxes?
14. What determines the market price and the natural price of a good according to Adam Smith's value theory? How does this determine the flow of resources in an economy? Why was this an important contribution?
15. What reasons did Adam Smith give for increases in productivity brought about by the division of labor? What is the most fundamental division of labor? How does productive labor differ from unproductive labor, and why did he make this distinction? Ultimately, what is responsible for the wealth of nations?
16. Why does Smith believe an unequal distribution of income is socially important?
17. Why does Adam Smith believe in free international trade? Are tariffs ever acceptable?
18. Explain Adam Smith's value theory, including his three theories of relative prices. What problems does this theory have?
19. Why did Adam Smith believe wages would differ across occupations? What is the wages fund doctrine?
20. What did Smith think would happen to the rate of profit over time? What reasons did he give for his conclusion?
21. How does Smith measure economic welfare?
22. What important policy debates provide the background for Malthus' work? How did the works of Godwin and Condorcet influence Malthus?
23. Explain Malthus' population theory. What policy implications did Malthus draw from this analysis?
24. Explain Ricardo's theory of rent and the law of diminishing returns.
[Note: Though the distribution is not entirely uniform, this works out to an average of four question per class]
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