Test One – Economic Principles, Problems, Thinkers & Theories


PART A     Multiple Choice (K/U)     15 MARKS

Clearly select and circle the BEST answer for each of the following multiple-choice questions.            * 15 questions worth 1 mark each.

1.  Marx offered commodity fetishism

a) to explain that capitalism is natural.
b) to explain surplus value.
c) to explain how workers see the truth about capitalism.
d) to explain voluntary exploitation.

2.  According to the following economist animal spirits best explain boom and bust cycles.

a) Hayek.
b) Friedman.
c) Keynes.
d) Galbraith.

3.  Public good economics is driven by

a)  the critical school of thought.
b)  analytical economics.
c)  the belief in managing capitalism for the benefit everyone.
d)  incentives, performance targets and competition.


PART B     Short Answer Questions (APP)     15 MARKS

Answer the following questions in the space provided.      * 5 questions  in total (Q1 = 3 marks, Q2 = 3 marks, Q3 = 4 marks, Q4 = 3 marks, Q5 = 2 marks)


1.  Explain how Yanis Varoufakis' concept of the twin peaks explains the debt crisis many countries face in Europe and North America.  (2 marks)

PART C – Written Responses (T)     10 MARKS 

* 2 questions worth 5 marks each.  5 marks earned for offering 5 fully developed points / examples.


1.  Agree or disagree with Friedman’s statement below.  In defending your position, be sure to make specific reference to the thinkers and ideologies we studied in class.  Be sure to discuss public good versus public choice economics and positive versus negative freedom.  (5 marks)

                                     Underlying most arguments against capitalism is a lack of belief in freedom itself


→ Analytical vs. Normative Economics.

→  Public Good vs. Public Choice Economics.

→  Opportunity Cost.

→  Scarcity.

→  Self-Interest.

→  Perfect Information & Perfect Competition.

→  The Invisible Hand & Spontaneous Order.

→  The Nash Equilibrium & the Prisoners' Dilemma.

→  2 fallacies covered as a class (#1 Rubin and Infinite Growth & #2 Nash, Self-Interest, and Game Theory).

→  Moral Hazard Problem.

→  4 Layer Cake (Goals, Economic Systems, Economic Ideologies).

→  Yanis Varoufakis Talk & Debrief on Austerity and the Debt Crisis.

→  3 Schools of Thought.

→  7 core thinkers + Hayek + Marx and commodity fetishism.

→  The content from the Keynes vs. Hayek Rap Anthem.

→  The economic philosophy of the film The Matrix and the 3rd School of Thought (the questions used to debrief the film).

→  5 core economic ideologies (capitalism, democratic socialism, socialism, communism, fascism) focusing on each ideologies MOP, PEA, Overall Goal, MOA, individualist vs. collectivist focus, and type of freedom (+ or -).


MOP = Means of Production

PEA = Primary Economic Actor

MOA = Means of Achieving Overall Goal