Laissez-Faire Economics and Classical Liberalism Quiz

Who developed the philosophy of laissez-faire economics?

• Karl Marx

• Milton Friedman

• Adam Smith

• John Maynard Keynes

What book did Adam Smith write in 1776 that criticized the old economic philosophy of mercantilism?

• The Wealth of Nations

• The Communist Manifesto

• The General Theory of Employment, Interest, and Money

• Das Kapital

According to Adam Smith, what was the first natural law of the economy?

• Business, education, and charity should be left up to individuals

• Workers should be paid just enough to survive

• Government should intervene actively in the economy

• All persons should follow their own self-interest

Who expanded upon Adam Smith's ideas and proposed the 'iron law of wages'?

• Thomas Malthus

• Friedrich Hayek

• John Stuart Mill

• David Ricardo

What did David Ricardo believe would happen if workers were paid more?

• They would demand better working conditions

• They would have more children and create a surplus of labor

• They would invest in education and improve their skills

• They would start their own businesses

What did the upper-middle classes embrace as best for the general welfare?

• Government intervention in the economy

• Non-intervention by the government

• Workers' rights and higher wages

• Equal distribution of wealth

What did the government ignore for years while the ideas of laissez-faire economics dominated?

• Reforms for the working class

• Child labor, city slums, and an impoverished working class

• Public services in factory cities

• Education and use of new technologies

What did the working classes turn to when they felt oppressed by the factory owners and the government?

• Acceptance of their situation

• Emigration to other countries

• Peaceful protests and negotiations

• Radical ideologies to achieve reform

Who is known for the theory of 'Comparative Advantage' in economics?

• John Stuart Mill

• David Ricardo

• Adam Smith

• Thomas Malthus

What is the main idea of the 'iron law of wages'?

• Wages will always rise with productivity

• Wages will always fall to the minimum level necessary to sustain the life of the worker

• Wages will always be equal to the value of the goods produced

• Wages will always increase with the cost of living