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116 Cards in this Set
- Front
- Back
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What 3 questions was Malthus trying to answer?
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Industrial revolution, but poverty
What should counter poverty Should gov do anything about poverty? |
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When were utopian writings at their height?
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The enlightenment
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Why did Malthus believe that mankind ends up at subsistence level of living?
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Agricultural supplies grow slower than the population.
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What happens to income per capita according to Malthus?
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There is no rising trend, it fluctuates along a flat trend line.
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What are the 3 assumptions of the Malthusian population model?
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BR is determined by custom
DR is inverse of material stnds material stds = per capita income |
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According to malthus what happens to death rates as we get wealthier?
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They decline
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According to malthus, what happens to material living standards as population increases?
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Material living standards decrease.
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WHat has to happen for population to increase?
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Birth Rates > Death rates
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How does malthus believe you convince the poor to stop reproducing?
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1) Control the rate of births
2) Risning death rates (more likely) |
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What kind of checks did Malthus believe there were on population?
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1) Positive checks
2) Preventitive checks |
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What are Malthusian Positive checks?
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war, famine, pestilence
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What are Malthusian preventitive checks?
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moral restraint, abortions, prophylactics
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What was the one way malthus believed could allow you to escape the overpopulation trap?
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Continual technolocial advancement.
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What was Malthus's fundamental macroeconomic question?
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Are general gluts possible in capitalist market economies?
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What is Says law?
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Supply allows its suppliers to act upon their own demand. Prices adjust.
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What did Malthus think of says law?
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It was bullshit.
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Why did Malthus disagree with Says law?
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To create new production to consume, individuals channel savings into investments. But when they save more they arent able to spend that money on consumption.
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How did Ricardo respond to Malthus's criticism?
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Prices will just fall.
Extra production will create econs of scale and lower unit costs. |
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Who was Ricardo a contemporary of?
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Contemporary of Malthus.
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Who contributed the theory of rent (marginal productivity of land)?
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Ricardo
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What was Ricardos fundamental conclusion regarding growth?
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Economic growth has a tendency to peter out.
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According to Ricardo, why did growth have a tendency to peter out?
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Because we run into diminishing returns.
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What was Ricardo's fundamental question?
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Can I figure out how the slices of the economic pie gets distributed?
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Who created the theory of distribution?
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Ricardo
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According to the Theory of Distribution, variable factors of production are paid what?
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The value of its marginal product.
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According to ricardo, what are the 3 variable factors?
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capital, land, labor
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What variable factors does ricardo combine?
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Capital and labor.
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What things did Malthus and ricardo share?
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Ricardos theory of distribution was unable to determine what share went to labor. So he valued subsistence wage.
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According to ricardo, where are workers paid from?
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A labor fund. This fund decreases as population increases.
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According to Ricardo, who wins during a population boom?
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Only landowners
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According to Ricardo, what factors of production are fixed?
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Land
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Why did ricardo believe that we encounter declining profits?
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Lack of land. You cant grow a fixed factor.
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What are the assumptions of Ricardos Labor theory of value?
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wage rates across industries =.
p = a*w |
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According to Ricaros Labor Theory of Value, what happens when you introduce production time?
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Workers take a kind of loan from employers. Wages are paid out of previous earnings.
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What are the assumptions of Ricardian equivalence?
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Capital markets are efficent, competitive, and uniform
Consumers are rational Ppl realize debt = taxation |
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What was the conclusion of Ricardian equivalence?
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it does not matter whether a government finances its spending with debt or a tax increase, because the effect on the total level of demand in the economy is the same
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How does issuing debt cause same damage as a tax?
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Gov takes out bonds
Govt owes face+coupon next yr W/ discout effect thats the same |
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Why is taxation and debt the same according to ricardo?
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They withdraw the same amount of spending from the economy
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How did ricardo believe countries can move beyond their PPF curve?
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Through trade and comparative advantage.
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What 3 different kinds of supply did mill identify?
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Elastic
, inelastic, something in between |
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What were Mills 4 primary contributions?
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Methodology in social sciences
Clarification of Benthems utility individual freedom theory of represnetative gov |
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Who replace mills work on political economy?
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Alfred Marshall 60 years later
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What was mills opinon of says law?
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Agreed, increased levels of output are dependent on accumulation and investment on capital.
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What direction did Mill believe that economies travelled?
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From a progressive state to a stationary state.
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What was mills fundamental question?
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Given a single cost function, how are profits from two seperate productions to be allocated in jointly produced goods?
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What are joint supplies?
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Two goods have a joint cost of production. chicken and eggs, coke and coal gas.
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How did mill answer his fundamental question?
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the two prices equal their average joint costs.
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What was Mills relation to socialism?
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Sensitive. For a time a Saint-simonian. Sympathetic to ideals, but not their analysis.
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What did Mills think about redistribution?
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Like equality, wanted to redistribute wealth, not income. Wealth is not an end in itself.
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According to Mill, what was the proper roll of government?
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Necessary and optional functions.
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According to Mill what were the necessary functions of government?
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tax
coinage protection enforcement contracts certain public goods |
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How much gov intervention did Mill want?
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Placed burden of proof on those that would advocate intevention. Laissez faire should be the rule.
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Who first voiced majority of popular exceptions to laissez faire?
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Mill
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What was Mills relation to the marginalists?
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Acted as a bridge to later marginalists.
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What did Marx have to say about classical economics?
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Not very nice things, except for Adam smith
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What did Marx believe that classical economists ignored?
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Classicists ignored historical context. They only talked about limited time periods.
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What were the 6 stages of history according to Marx?
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Primitive communism
Slavery Feudalism Capitalism Socialism Puree Communism |
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According to Marx, what was each stage of history characterized by?
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A different method of production.
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Who was a dialectacl materialist?
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Marx
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What is Marx's theory of exploitation based on?
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Ricardos labor theory of value
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What is the starting and ending point of history according to marx>
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communism?
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What is primitive communism marked by>
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Communal property, no classes
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What is slavery created by?
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Created by the first suprluses
Exploitation of one class by another |
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When does class conflict begin?
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slavery
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What creates feudalism?
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class conflict
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What is the difference between feudalism and slavery?
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Feudalism is better at hiding the explotation
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According to Marx where/when is value created?
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It is created in production, prior to exchange.
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According to Marx, what is the value of an object determined by?
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Value is created by the labor embedded in the object,
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Who are the 3 leaders of the Marginalist revolution?
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William Jevins
Carl Menger Leon Walras |
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What was the big connection that the marginalists made?
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They connected the principle of diminishing utility and the theory of demand.
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How much math did Menger use?
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Menger was very reluctant to use math to describe what he saw as social phenomen.
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What important principle did Jevans contribute?
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The Equimarginal principle
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What is the fundamental question of the equimarginal principle?
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How does an optimizing consumer make choices when confronted with different goods and a budget constraint?
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What is the conclusion of the equimarginal principle?
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Consumers will arange their prefferences so that marginal utility goods are relative to price.
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Where is Benthem formally embedded?
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With Jevans utility maximings consumers assumption
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What did Jevans do with indifference curves?
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He constructed a behavioral model explaining our choices. Determines where demand curves come from.
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Who founded the Austrian school?
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Carl Menger
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According to Menger, why are goods valuable?
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They serve various uses whose importance differs.
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What was one of mengers key insights?
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Used the subjective theory of value to conclude that both sides gain from trade.
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Who attacked the historical school?
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Carl Menger
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How much math did Menger use?
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Menger was very reluctant to use math to describe what he saw as social phenomen.
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What important principle did Jevans contribute?
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The Equimarginal principle
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What is the fundamental question of the equimarginal principle?
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How does an optimizing consumer make choices when confronted with different goods and a budget constraint?
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What is the conclusion of the equimarginal principle?
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Consumers will arange their prefferences so that marginal utility goods are relative to price.
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Where is Benthem formally embedded?
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With Jevans utility maximings consumers assumption
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What did Jevans do with indifference curves?
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He constructed a behavioral model explaining our choices. Determines where demand curves come from.
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Who founded the Austrian school?
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Carl Menger
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According to Menger, why are goods valuable?
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They serve various uses whose importance differs.
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What was one of mengers key insights?
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Used the subjective theory of value to conclude that both sides gain from trade.
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Who attacked the historical school?
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Carl Menger
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What was the historical school?
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History provides all the answers
economics vary over cultures No unified theories of economics |
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Who pioneered the development of general equilibrium theory?
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Leon Walras
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WHo discovered the marginal theory of value independently of jevons and menger?
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Leon Walras
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What is the Walras theory?
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if all other markets in an economy are in equilibrium, then that specific market must also be in equilibrium.
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What 3kinds of economies of scale did Marshall predict?
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Increasing cost industries
Decreasing cost industries Neutral cost industries |
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According to Alfred Marshall what is a decreasing cost industry?
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Expansion in supply lowers cost due to economies of scale.
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What 2 forms can economies of scale have?
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External: caused from production gains
Internal: Decreases in input prices |
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Who do we generally attribute the synthesization of supply (classical) and demand (marginalism)?
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Alfred Marshall
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According to Marshall, what determines price?
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The interaction of supply and demand.
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Which later economist was a heterodox?
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Thorstein Veblen
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Was Thorsten Veblen a marxist
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no
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Compared to margnalist and classicalists, where did Veblen focus his work?
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On how preferences are formed.
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Whose work paved the way for behavioral economics?
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Thorstein Veblen
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What was Veblens major work?
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the Theory of the Leisure Class
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According to Veblen what are the 2 primary human motivators
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Self Preservation
Emmulation |
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What problem does Veblen have with conspicous consumption?
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Overtime the bar for what we need continues to rise. Can lead to positively sloped demand curves.
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According to Veblen the quantity demanded of a good depends on what?
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The Actual price of the Good
THe conspicuous price |
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What happens if the Veblen effect overwhelms the standard price effect?
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Results in positively sloped demand curves
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What was Veblens criticism of the neoclassicalists?
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Assumptions on taste, preferences and how they effect consumption. Ppl do not engage in utlity calculs.
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What are the 4 conclusions of the General Theory of employment, interest and money?
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Econs can have too little AD
Self corrections work slowly Government can boost AD Monetary policy can be ineffective |
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According to Keynes, a lack of AD does what?
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Invalidates Says Law
Creates involuntary unemployment |
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What theorists did Keynes admire?
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Malthus, a shame that ricardo won.
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According to Keynes how can governments boost AD?
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Fiscal and monetary policy
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What was Keynes views of savings/investment?
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Not just a function of interest rates.
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Why did Keynes argue that monetary policy might not always work?
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There is a zero bound on nominal interest rates
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At an interest rate of 0, what happens?
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People believe that cash and bonds are perfect substitutes
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