Special instructions: Please pull an equal number of questions (10) from each unit.
Unit One (Questions 1-20)
1. Which of the following best describes how ancient economists viewed the role of slavery in society?
A. It was considered immoral but tolerated.
B. It was an integral part of the economy.
C. It was allowed in commerce but not in the home.
D. It was only acceptable during times of war.
ANSWER: B
2. According to Xenophon, which of the following statements is true of slaves in ancient Greece?
A. Slaves were considered sub-human.
B. Slaves were unable to hold public office.
C. Slaves had no worth.
D. Slaves were forbidden to work with animals.
ANSWER: B
3. How did Aristotle think that jobs should be assigned?
A. Jobs should be assigned strictly on social standing.
B. Jobs should be assigned by public lottery.
C. Jobs should only be filled by warriors.
D. Jobs should be assigned both on social standing and ability.
ANSWER: D
4. How did Aristotle view happiness?
A. The greater the wealth, the greater the happiness.
B. The higher the social status, the greater the happiness.
C. A balance between the needs of the body, the external world, and the soul could make a person happiest.
D. Military service brings the greatest joy.
ANSWER: C
5. Which of the following is not one of Fan Li’s golden rules?
A. Be Stingy
B. Control credit
C. Analyze market opportunities
D. Lead by example
ANSWER: A
6. Which of the following isone of Fan Li’s 12 golden safeguards?
A. Do not be slow in debt collection.
B. Do not give in to herd instinct.
C. Do notwork against the business cycle.
D. All of the above
ANSWER: D
7. How did the ancient Greek philosophers and economists categorize their world?
A. They had three classifications: gods, scientific objects, and willing people.
B. They had four classifications: gods, scientific objects, willing people, and food.
C. They had two classifications: earth and wind.
D. They had a unitary view: there were no categorizations.
ANSWER: A
8. How did the ancient Egyptian philosophers and economists categorize their world?
A. They had three classifications: gods, scientific objects, and willing people.
B. They had four classifications: gods, scientific objects, willing people, and food.
C. They had two classifications: earth and wind.
D. They had a unitary view: there were no categorizations.
ANSWER: D
9. Considering Xenophon’s life experience, which statement is most accurate?
A. Because he personally witnessed the death of Socrates, his writings demonstrate anger at Greek society.
B. Because he lived in several city-states, he had a well-rounded perspective of Greek culture and politics.
C. Because he was blind, he was just.
D. Because he owned Greek slaves, he was a social outcast and offered marginal insight into mainstream Greek life.
ANSWER: B
10. Which author is associated with the following quote, and why? “Any kind of marriage is approvable, provided it pleases all those that are concerned in it.”
A. Xenophon was associated with the quote, because he advocated Greek-Persian intermarriage.
B. Fan Li was associated with the quote, because as a pharmacist he knew that people were all the same inside.
C. Chanakya was associated with the quote, because he viewed marriage as the basis for all disputes.
D. Aristotle was associated with the quote, because he was the product of a mixed marriage.
ANSWER: C
11. Which is the most important resource for historians and economists to use when evaluating ancient economies?
A. Satellite images of sunken ruins
B. A written record detaining commerce and rules
C. Verbal traditions passed down from the generations
D. A Bible-based categorization system
ANSWER: B
12. Aristotle’s writing is known for which of the following?
A. Instituting the scientific method
B. Breaking down the complex to the basic
C. Having a direct writing style
D. All of the above
ANSWER: D
13. How does Aristotle’s writing reflect the concept of comparative advantage?
A. Slaves were deemed inferior.
B. The gods decided the fates of mankind.
C. Those citizens with natural aptitude should specialize in appropriate jobs.
D. The comparison of the Greek army to a giant sea serpent.
ANSWER: C
14. How is Xenophon’s work written?
A. Direct exposition
B. Iambic pentameter
C. Free verse
D. Dialogue format
ANSWER: D
15. How did Xenophon view the role of children in society?
A. They were a bridge between the past and future.
B. They were unable to contribute economically.
C. They were protected by the gods.
D. None of the above
ANSWER: A
16. What three basic questions do economists from all eras try to answer?
A. When to produce, how to produce, and how much to export
B. What to produce, how to produce it, and for whom to produce
C. How large should the population be, how should family life be managed, how to raise an army
D. What is virtue, what is truth, what is compassion
ANSWER: B
17. According to Fan Li and Xenophon, what will merchants do?
A. Smile as they take your money.
B. Steal the coat off your back.
C. Sell their goods where they fetch the highest prices.
D. Sell their goods for fair value.
ANSWER: C
18. According to Fan Li, in which area was it important to have a definite focus?
A. Life
B. Business
C. Both A and B
D. None of the above
ANSWER: C
19. Which of the following disciplines are related to economics?
A. Social Sciences
B. Philosophy
C. Business Studies
D. All of the above
ANSWER: D
20.How is economic thought a dynamic process?
A. Economic thought influences society as society influences economic thought.
B. Economic thought develops independently from one culture to the next yet always produces the same outcomes.
C. Economic thought disables old rules and replaces them with new ones.
D. Economic thought is not a dynamic process; it is static.
ANSWER: A
Unit Two (Questions 21-40)
21. What did St. Thomas Aquinas, a scholastic, have in common with Xenophon, an ancient economist?
A. Christian principles
B. A dialogue writing structure
C. Latin as a lingua franca
D. A rising fear of Islam
ANSWER: B
22. Why did St. Thomas Aquinas devote significant analysis to the role of interest in commercial transactions?
A. The Vatican got a percentage of all interest charged in land transactions in the papal states.
B. Compound interest was impossible to calculate on an abacus.
C. Rival Islamic thought declared the charging of interest unacceptable.
D. Rival Greek banks were more profitable than Roman ones.
ANSWER: C
23. What is Bullionism?
A. A methodology to gauge the wealth of a nation by its reserves of precious metals
B. A belief that bull markets will always return
C. A system of balancing trade to allocate goods and services across international borders
D. None of the above
ANSWER: A
24. Which of the following statements about the role of colonies in mercantilism is false?
A. Colonies were a captive market.
B. Colonies were able to trade freely amongst themselves.
C. Colonies were a source of raw materials.
D. Colonies were a destination for domestic labor force workers.
ANSWER: B
25. On what economic grounds did Sir William Petty justify a mercantilist production system?
A. Raw materials were essentially “free on board” (f.o.b.) because of the large Royal Navy.
B. England had an optimal geography as an island.
C. Spain had adopted a mercantilist system earlier than England did, and Spain was winning the economic war.
D. Goods produced by a large number of specialists were made better and cheaper.
ANSWER: D
26. Who did St. Thomas Aquinas argue was the best administrator of commercial laws?
A. The papal nuncio
B. Nations and nation states
C. Sephardic Jews
D. Mercantilist guilds
ANSWER: B
27. What classical economic theory did Adam Smith use to describe how prices were set by mercantilists?
A. Monopoly pricing
B. Game theory
C. The Law of One Price
D. Perfect competition
ANSWER: A
28. According to Adam Smith, who were the main economic winners in the mercantilist system?
A. Producers
B. Consumers
C. Colonists
D. The Spanish
ANSWER: A
29. According to Adam Smith, how were transportation costs accounted for in the mercantilist system?
A. Directly through excise at port-of-entry
B. Indirectly through high taxes to protect sea lanes
C. Directly in the value added tax
D. Indirectly through colonial reparations
ANSWER: B
30. How did Sir William Petty approach economic analysis?
A. Through oblique references to the role of God and man
B. Through the use of the dialogue technique
C. Like an econometrician and statistician
D. Like a true economic historian
ANSWER: C
31. What important discovery in colonies in the Americas affected rudimentary monetary policy in the sixteenth and seventeenth centuries?
A. Tobacco and its subsequent taxation
B. Rum and its subsequent taxation
C. Silver mines and their expansionary monetary consequences
D. Gold mines and their contractionary monetary consequences
ANSWER: C
32. What did the scholastics believe was an important factor in a “just” price setting mechanisms?
A. A voluntary market
B. Proof of papal tax payments
C. Sufficient contributions to local monasteries
D. A signed letter of intent
ANSWER: A
33. According to the scholastics, what economic concept was key to setting “just” market prices?
A. Monopoly powers
B. Mercantilist subsidies
C. Relative scarcity
D. Divine Right
ANSWER: C
34. According to Adam Smith, what effect did the mercantilist system have on business decisions?
A. It increased uncertainty because of changing government policies.
B. It increased risk-taking to seek monopoly profits.
C. It decreased risk-taking because of oligopolistic competition.
D. It introduced the notion of chaos theory.
ANSWER: B
35. Under mercantilism, how is the state organized?
A. As a strong central actor
B. As a facilitator of free markets
C. As a broad social safety net
D. None of the above
ANSWER: A
36. How did Sir William Petty’s work relate to Aristotle’s?
A. Petty broke down the complex to the basic through statistical analysis.
B. Petty applied Aristotle’s dialogue method.
C. Petty restricted his analysis to the economy of the household.
D. All of the above
ANSWER: A
37. Which of the following was necessary to a mercantilist system?
A. A king
B. A strong navy
C. Colonies
D. Both B and C
ANSWER: D
38. What role did Adam Smith play in mercantilist thought?
A. To this day, he remains its greatest defender.
B. He was its most prominent detractor.
C. He established its basic assumptions.
D. He was a bridge between the scholastics and mercantilists.
ANSWER: B
39. What is usury?
A. Charging unfairly high interest on loans
B. The same as tithing
C. Usurping papal authority
D. A “use tax” on goods
ANSWER: A
40. How was slavery viewed under a mercantilist system?
A. It was decried as unethical.
B. It was restricted to the American South.
C. It was seen as a form of labor.
D. It was not discussed.
ANSWER: C
Unit Three (Questions 41-80)
41. According to Adam Smith, which of the following are kinds of “value?”
A. Value in use
B. Value in time
C. Value in exchange
D. Both A and C
ANSWER: D
42. What economic concept is used to explain the famous diamond-water paradox?
A. The Law of One Price
B. Say’s Law
C. Physical product analysis
D. Marginal analysis
ANSWER: D
43. The quote, “By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it,” is associated with which economic concept?
A. Marginal analysis
B. The diamond-water paradox
C. The invisible hand
D. Value in exchange
ANSWER: C
44.According to David Ricardo, how was the value of a good calculated?
A. It was directly proportional to the amount of human labor used to make it.
B. It was apportioned between capital and labor.
C. It was directly proportional to the level of entrepreneurism.
D. It was optimally apportioned between land, labor, and capital.
ANSWER: A
45. Which statement about Ricardo’s work is true?
A. Marxists cited it.
B. Free market economists cited it.
C. Adam Smith cited it.
D. All of the above
ANSWER: D
46. David Ricardo’s theory of “comparative advantage” can be applied to which of the following?
A. Trade between nations
B. Division of labor in a household
C. Division of labor on a farm
D. All of the above
ANSWER: D
47. How did Bentham explain human motivations?
A. Through a calculus of pleasure and pain
B. Through schemata of rules and order
C. Through a rubric of ecclesial sin and shame
D. Through a paradigm of hunger and gluttony
ANSWER: A
48. Who is most strongly associated with the concept of “utilitarianism?”
A. Adam Smith
B. Jeremy Bentham
C. David Ricardo
D. Karl Marx
ANSWER: B
49. What is the basic concept of “utilitarianism?”
A. The greatest number for the greatest good
B. The greatest consumption for the greatest number
C. The greatest good for the greatest number
D. The greatest king for the greatest country
ANSWER: C
50. The emergence of which modern economic theory is associated with Jeremy Bentham?
A. Irrational exuberance theory
B. Usury theory
C. Choice theory
D. Perfect competition and theory of the firm
ANSWER: C
51. According to Adam Smith, the “invisible hand” was a valid alternative to what characteristic of mercantilism?
A. Free markets
B. Bullionism
C. Colonial labor pools
D. A strong central government
ANSWER: D
52. What societal factor contributed to the popularity of Karl Marx’s work?
A. Crumbling of the Great Cathedrals of Europe
B. Rise of Islam
C. Increasing economic disparity
D. Fear of institutional bankruptcy
ANSWER: C
53. How did Karl Marx view the role of skill-based education?
A. It existed to confuse the minds of simple workers.
B. It needed to be centralized to strengthen the state.
C. It needed to be decentralized to empower the masses.
D. It was linked to higher wages.
ANSWER: D
54. According to Marx, how did industrialization affect human labor?
A. It made life easier for all.
B. It commoditized it.
C. It strengthened local communities.
D. It perfected it.
ANSWER: B
55. Which of the following is most closely associated with the works of Karl Marx?
A. Communism
B. Fascism
C. Papalism
D. Mercantilism
ANSWER: A
56. How are Adam Smith and Karl Marx related?
A. Smith heralded the beginning of the Classical Era, and Marx ended it.
B. Both Smith and Marx cited David Ricardo.
C. Neither Smith nor Marx cited Keynes.
D. All of the above
ANSWER: D
57. Which of the following authors did NOT address the role of industrialization?
A. Karl Marx
B. Adam Smith
C. David Ricardo
D. Fan Li
ANSWER: D
58. Which economic concept is most closely linked to Jeremy Bentham?
A. Profit
B. Efficiency
C. Utility
D. Public goods
ANSWER: C
59. Which is a hallmark of economic thinking and analysis during the Classical Era?
A. Allocation of resources
B. Development of kingly powers
C. Land conservation
D. Capital improvements
ANSWER: A
60. Which of the following is not a component of Classical Era economic thought?
A. Labor theory of value
B. Globalization
C. Invisible hand
D. Utilitarianism
ANSWER: B
61. How did Alfred Marshall differ from Marx in his view of human labor?
A. Marshall factored in how workers value their time.
B. Marshall factored in the industrialization of production.
C. Marshall factored in the end of the mercantilist era.
D. All of the above
ANSWER: A
62. How did Alfred Marshall criticize Marx’s view of human society?
A. Marshall said all labor was distributed fairly.
B. Marshall said it was primitive.
C. Marshall said it lacked economic rigor.
D. None of the above
ANSWER: B
63. How did Alfred Marshall describe the role of economic jargon?
A. It was a challenge for everyday people to understand.
B. It is important to consider in context.
C. It was becoming more widely understood.
D. Both A and B
ANSWER: D
64. Alfred Marshall is most associated with which economic concept?
A. The visible hand
B. The short run
C. Communism
D. Utilitarianism
ANSWER: B
65. According to Alfred Marshall, how does time affect economic equilibriums?
A. The longer the time horizon, the greater the potential supply
B. The shorter the time horizon, the greater the demand
C. The shorter the time horizon, the greater the potential supply
D. The longer the time horizon, the greater the potential demand
ANSWER: A
66. Fill in the blank. According to Alfred Marshall, time is more important than ______.
A. Love
B. Space
C. Marginal analysis
D. The “invisible hand”
ANSWER: B
67. What did Keynes believe about the role of doubt in an economy?
A. It was related to future expectations of returns on capital.
B. It was the cause of all economic downturns.
C. It was unrelated to population growth.
D. None of the above
ANSWER: A
68. Which financial tool might an economist cite as most relevant to Keynes’ economic analysis?
A. A forward price to earnings ratio formula
B. A futures contract pricing formula
C. A present value formula
D. All of the above
ANSWER: D
69. According to Keynes, how do downturns in economic cycles manifest themselves?
A. Suddenly
B. Violently
C. Completely
D. Both A and B
ANSWER: D
70. According to Keynes, how do upturns in economic cycles manifest themselves?
A. With a clear inflection point
B. With a crisis of confidence
C. With a slow sustained rally
D. None of the above
ANSWER: C
71. How are Jeremy Bentham’s and Milton Friedman’s later work related?
A. They both focus on consumer choice.
B. Neither addresses the role of needs of the underclass.
C. Neither addresses the role of capital.
D. They both focus on government rules as a panacea.
ANSWER: A
72. How can Neo-Classical thinking be generally classified?
A. As a microeconomic discourse
B. As a macroeconomic discourse
C. As an international economic discourse
D. As a pure synthesis of micro and macroeconomics
ANSWER: A
73. What did Keynes believe about the free market?
A. The “invisible hand” choked consumers.
B. The free market sometimes generated inefficient outcomes.
C. The free market was cursed by ethical lapses.
D. “The Law of One Price” ran roughshod over consumers.
ANSWER: B
74. How would an economist best describe Keynes’ approach to government actions?
A. Interventionist
B. Isolationist
C. Monetarist
D. Communist
ANSWER: A
75. Which strain of economic thought is Milton Friedman most strongly associated with?
A. Keynesianism
B. Monetarism
C. Neo-Classicism
D. None of the above
ANSWER: B
76. Which event in the US made economists reconsider the work of Keynes?
A. 9/11
B. Bush v. Gore
C. The banking meltdown of 2008
D. None of the above
ANSWER: D
77. What economic manifestation in US economic history weakened Keynes’ economic arguments?