Exercises 1. A) In order to see whether you have properly understood the reading, please answer the following multiple choice questions

A) In order to see whether you have properly understood the reading, please answer the following multiple choice questions. In each case, there is only one proper solution.

Q1: What do we mean by the term “neoclassical synthesis”? (p. 46.)

(a) an empirical consensus of professional economists

(b) a theoretical consensus of professional economists

(c) the superiority of macroeconomics

(d) the superiority of microeconomics

Q2: Which of the following are synonymous with “neoclassical economics”? (p. 46.)

(a) orthodox, concentrated or stream economics

(b) heterodox, common denominator or stream economics

(c) heterodox, commercial or mainstream economics

(d) orthodox, conventional or mainstream economics

Q3: According to the textbook, what is one of the most significant limitations of economics? (p. 47.)

(a) It reduces social reality to changes in prices and quantities.

(b) It takes a rigorous approach to human behaviour.

(c) It defines itself as a social science.

(d) It defines itself too narrowly.

Q4: What are the very basic elements of any science (or discipline)? (p. 47.)

(a) Asking as many questions as possible, proposing alternative answers (that is, theories), and applying an appropriate methodology.

(b) Asking the right questions, proposing alternative scenarios as answers, and applying a science directly.

(c) Asking questions, proposing answers, and applying any methodology.

(d) Asking the right questions, proposing answers (that is, theories), and applying an appropriate methodology.

Q5: Which of the following statements are true in case of neoclassical economics? (p. 47.)

(a) Neoclassical economics is the most rigorous and systematic social science.

(b) Neoclassical economics is the least rigorous and systematic social science.

(c) Neoclassical economics is just one branch of a universal paradigm that is called economics.

(d) Neoclassical economics is the most influential but the least systematic social science.

Q6: What is the principal method of economics? (p. 47.)

(a) methodological individualism

(b) rational choice

(c) political economy

(d) scarcity

Q7: What is “methodological individualism”? (p. 47.)

(a) The basic agents of the economy are the rational, self-contained and relevant individuals.

(b) The basic actors of the economy are the rational, self-centred individuals.

(c) The basic agents of the market are the irrational, self-contained and profit-maximiser producers.

(d) The basic actors of the economy are the irrational, self-centred consumers.

Q8: In which particular field were classical economists such as David Ricardo involved in during the late 18^th, early 19^th century? (p. 48.)

(a) international monetary exchange

(b) international trade

(c) economic efficiency

(d) state regulation

Q9: Why could international trade be at the very heart of the interest of classical economists? (p. 48.)

(a) Because trade means the expansion of human activity, the expansion of markets.

(b) Because trade means earning money and making a profit.

(c) Because trade means the accumulation of gold in the hands of producers.

(d) Because trade means the expansion of human capital.

Q10: In Chapter 4 and 8, we will learn precisely how to define “comparative advantage”. For the moment, please consider the following: why did Great Britain export textiles to Portugal, while the Portuguese exported port (wine) to the island? (p. 48.)

(a) The British were relatively more efficient in the production of port, while the Portuguese were relatively more efficient in the production of textiles.

(b) Textiles were available in great abundance in Great Britain, while port was available in great abundance in Portugal.

(c) Textiles were available in great abundance in Portugal, while port was available in great abundance in Great Britain.

(d) The British were relatively more efficient in the production of textiles, while the Portuguese were relatively more efficient in the production of port.

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