Question

1. The approach that views capitalism as a system of markets is called the:

	A.	Political economy approach.
	B.	Neoclassical approach.
	C.	Keynesian approach.
	D.	Institutional approach.

1 points   

QUESTION 6

1. The conception of human beings as being calculating, amoral, and self-interested is called:

	A.	Constrained behavior.
	B.	Other-regarding behavior.
	C.	Homo Economicus.
	D.	Efficiency.

1 points   

QUESTION 7

1. The three dimensions of political economy are:

	A.	Household, Firm, and Government.
	B.	Competition, Command, and Change.
	C.	Fairness, Efficiency, and Democracy.
	D.	Profits, Commodities, and Markets.

1 points   

QUESTION 8

1. Economic systems are ways of organizing:

	A.	Money.
	B.	Natural resources.
	C.	Markets.
	D.	Labor.

Answer 1

5. Ans: B. Neo-classical approach. The Classicals advocated that if market is left alone without any government intervention then the outcome will be efficient. In capitalism, all the decisions are market determined. Neo-Classicals supported that view.

6. Ans. C. The term homo economicus was coined by J.S. Mill. He defined human beings who are economic agents as "who inevitably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labor and physical self-denial with which they can be obtained." This implies humans are rational and are always driven by self-interest.

7.Ans. A. Households and firms are economic agents in all the disciplines. In political Economy approach, the role of government is highlighted to be essential for working of the economy. Hence, the three dimensions in political economy are household, firm and government.

8. Ans. B. Resources are scarce and allocating those scarce resources efficiently is the subject matter of economics.