What defines national wealth in Mercantilism?
The quantity of gold and silver accumulated.
How does Mercantilism seek to increase national wealth?
Through state intervention in trade and production.
What does Mercantilist policy seek to achieve in trade balance?
An export surplus.
How does Mercantilist policy protect domestic producers?
By using tariffs, quotas, or import bans.
What does Physiocracy consider the source of national wealth?
Agricultural production.
Which author published the concept of Physiocracy in 1767?
Dupont de Nemours.
What is Quesnay’s Economic Table known as?
The first macroeconomic model.
What does Quesnay’s Economic Table describe?
Real and monetary flows between three classes.
Which three classes does Physiocracy distinguish?
Productive farmers, sterile artisans, and landowning rentiers.
What does the Classical School explain about national enrichment?
It explains it through natural economic laws, competition, and market self-regulation.
Which book by Adam Smith introduced the invisible hand and absolute advantage?
Wealth of Nations, published in 1776.
What theory did David Ricardo develop related to international trade?
The theory of comparative advantage.
According to David Ricardo, what effect do population growth and rising wages have?
They reduce capitalist profits and increase land rents.
What does Say's law state about supply and demand?
Every supply creates its own demand, making general overproduction impossible.
How does Say's law treat money in relation to the real economy?
Money is treated as neutral in relation to the real economy.
What does the neoclassical approach study in economics?
How rational agents coordinate through markets to reach equilibrium.
How does methodological individualism explain economic phenomena?
By starting from the rational choices of sovereign individual agents.
What is marginal utility in economics?
The additional satisfaction from one extra unit of a good.
How does marginal utility change as quantity consumed increases?
It decreases as the quantity consumed increases.
What equation represents money-market equilibrium in the neoclassical model?
What equality holds in the neoclassical goods market between production, income, and demand?
What equality follows from the neoclassical goods market equilibrium?
In which year did Keynes publish The General Theory of Employment, Interest and Money?
1936
What economic conditions were present when Keynes published his General Theory?
Mass unemployment and the Great Depression
What does effective demand determine according to Keynes?
The production level and employment
What is effective demand?
Demand anticipated by firms that determines production and employment
When does underemployment equilibrium occur?
When goods supply equals anticipated demand but some labor remains unemployed
Why does Keynes argue state intervention is necessary?
Because capitalism does not spontaneously generate full employment
What must state intervention do according to Keynes?
Increase demand to encourage production and employment
On which date did the Wall Street crash known as Black Thursday begin?
24 October 1929
How much did Wall Street’s market capitalization fall between September 1929 and July 1932?
By 87%
Through which mechanisms did the American financial crisis spread internationally?
Bank failures, repatriation of European capital, falling production, collapsing imports and exports, and protectionist trade measures
What does deflationary policy reduce in an economy?
Prices, wages, public spending, and money creation
What does Keynesian stimulus increase to support demand and employment?
Public spending and credit
How long did the Thirty Glorious Years approximately last?
Approximately 23 years.
When did the Thirty Glorious Years begin and end?
From the early 1950s until October 1973.
What was Japan's average annual GDP growth from 1950 to 1973?
Over 9%.
What was the average annual GDP growth in Germany between 1950 and 1973?
About 6%.
Which economic factors lowered unit costs and expanded consumption of durable goods?
Mass production, capital accumulation, technical progress, assembly-line work, and productivity gains.
What was the price increase of oil during the first oil shock in 1973?
The price rose from 10 to 40 dollars per barrel.
How did the oil-price increase affect firms and consumers?
It raised firms’ production costs and consumer prices.
What was the impact of the oil-price increase on household income and the trade balance?
It reduced real household income and worsened the trade balance.
How did the oil-price increase influence production and investment?
It weakened production and investment.
What event triggered the second oil shock in 1979?
The Iranian Revolution.
How did the second oil shock affect the real price of oil compared to 1973–1979?
It doubled the real price of oil.
Why did growth return in the late 1980s after the second oil shock?
Because fiscal deficits supported demand, monetary policy became less restrictive, and the oil counter-shock lowered energy prices and inflation.
What are toxic assets in finance?
Financial assets with negligible or zero value, often linked to subprime mortgages.
When did Lehman Brothers declare bankruptcy?
15 September 2008.
What does the monetarist explanation blame for the 2008 crisis?
Excessive liquidity and low Federal Reserve interest rates from 2002 to 2004.
What does the Keynesian explanation blame for the 2008 crisis?
Intrinsically unstable financial markets.
What policies did crisis recovery rely on after 2008?
Expansionary fiscal and monetary policies including public spending and low interest rates.
What are the main branches of Mercantilism?
Spanish bullionism, French Colbertism, and English commercialism.
When is the mercantilist period conventionally dated?
From 1500 to 1750.
What tax policy do Physiocrats advocate?
A single tax on landowners.
What economic reforms do Physiocrats support?
Land reform, high wages, abolition of internal taxes and tolls, and free grain trade.
What principle summarizes Physiocrats' economic policy?
“Let it be and let it pass.”
How does Karl Marx define surplus value?
As the difference between value created by labor power and the wage paid for it.
In which year did Karl Marx define surplus value?
In 1867.
In neoclassical distribution theory, what equals the real wage?
The marginal productivity of labor.
In neoclassical distribution theory, what equals the real interest rate?
The marginal productivity of capital.
When does the capital market reach equilibrium in the neoclassical model?
When flexible real interest rates equalize household saving and business investment.
How did Keynesian state regulation support growth during the Thirty Glorious Years?
Through public works, inexpensive credit, and full employment policies.
When did economic growth resume after the first oil shock?
Growth resumed everywhere in 1976.
What role did households play in the economic recovery after 1973?
Households maintained consumption.
How did oil-exporting countries contribute to growth resumption in 1976?
They increased demand.
What policy action helped governments support growth after the first oil shock?
Governments adopted stimulus policies.
What was the average annual recession rate in the UK during the second oil shock?
1.7%.
How did the second oil shock affect economic growth in the US and Germany?
They had nearly zero growth for three years.
For how long did France experience weak growth after the second oil shock?
Six years.
When did the Coronavirus crisis affect the economy?
From 2020 to 2022.
In which year did the Russia–Ukraine conflict and its economic consequences begin?
In 2022.
Answer 34 questions on Economic Doctrines and Major Crises.
1. How does mercantilism define national wealth?
2. Which policy best reflects the mercantilist goal of achieving an export surplus?
Go over the full study guide for Economic Doctrines and Major Crises.
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