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Austrian School of economics test

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Quiz by lml
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Last updated: January 5, 2024
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First submittedMay 6, 2021
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1. The first Austrian economists based their contribution mainly from
The Spanish scholastics
The classical liberals
The founding fathers, mainly thomas Jefferson
Greeks philosophers Democrit and Aristotle
Menger, Böhm-Bawerk and mises were influenced by the ideas of Tomás de Aquino and Juan de Mariana, in terms of logic analysis, individualism and human freedom
2. The Austrian school relies on two principles:
Social psychology and human consciousness
Indirect realism and the invisible hand
Free market and gold standard
Subjetivism and methodological individualism
The Austrian school is human-action related, that is we cannot know what humans will decide and most of aspects in economics are individual decisions-related.
3. The human action is, according to Mises,
Will put into operation
Any movement of the human body
The state of being active
Uneasiness being satisfied
A project may not success after the action, satisfaction may not occur.
4. Why terms like "aggregate demand" are way less relevant to the Austrian School's Methodology
They can't relate to the actions of individuals
They are math-related
They are used as a way to control the economy
5. A sudden high demand on a product leads to
The fall of the interest rate
The emerge of new stages of production
The fall of the product's price
The detrimental of employment for companies furthest away from this product
This is the key question to evaluate a good economist according to Hayek: https://mises.org/wire/hayeks-best-test-good-economist
6. "Thanks" to a bank loan in our modern central bank system, a company invested in nuclear fusion, it is expected to take 20 years to complete. What will tend to happen after few years?
Other energy companies will make losses
If the company is serious and calculated expenses well, unemployment will decrease
Many employees will abandon the project encouraged by better salaries in other energy companies
More others companies under development will be profitable
For a good grasp, look at the 6 consequences of credit expansion by Professor Huerta de Soto: https://www.youtube.com/watch?v=rQd7SYFEapA&t=484s
7. Who is not austrian author
Murray Rothbard
Israel Kirzner
Alan Greenspan
Huerta de Soto
Friedrich Hayek
Carl Menger
If that guy was truly libertarian he would not have controlled the interest rate.
8. What is the main indicator an entrepreneur use to decide to initiate a project in a free-currency society?
The price of the product will not decrease over time and there is a profit considering today's prices
Cheaper labor, the profit is higher than the employees' salary
The profit is at least 20% of the investment
Cheaper investment goods, the profit is higher than the employees' salary
The profit is higher than the interest rate
When wondering of investing money first you evaluate if it is better to just lend it.
9. According to Carl Menger, how an asset becomes money in a free society?
Relatively stable real value
Relatively inflationary tend
The asset must be useful for other sectors in case of fall
10. A recession for the Austrian school is considered as
The collapse of the market
The beginning of the healing of the market
The lose of important sectors jobs
None of mentioned
When recession explodes bad projects are detected, this is crucial for reallocation of people into genuine profitable businesses
11. The minimum wage
Increases poverty
Diminishes poverty and improve the quality of life for the lower class
Keeps the same amount of poverty but improves the quality of life for the lower class
12. The great depression was devastating because
Lack of bank regulation
The fed didn't print enough money to face the deflation
Stock market trading on margin
Hoover and Roosevelt overregulated the market
The Dust Bowl
13. How has the state become that big
The incipient conditions of the Industrial Revolution required big actions
Capitalism can only exist thanks to the government, both need to grow along
After decades of propaganda, the government convinced the citizens of the need for supposed guarantees such as education and pensions
People required guarantees to be secured and get the rights they deserved
More than one is correct
Public roads became norm in the modern Age, Education introduced in Prussia, pensions and health by Bismarck in Germany, Central Banking in England. Purchasing power decreased
14. Entrepreneurship is defined as
Innate ability of human beings to improve their life condition
Adquired abilty from which someone can improve his life condition
Adquired ability from which someone can discover profit opportunities in his environment
Innate ability of human beings to discover profit opportunities in their environment
15. The value of a product is determined by
The invisible hand
The time and costs of production
The time and costs of production + interest rate
The subjective valuation of the market
16. Why a controlled interest rate at 0% is so dangerous?
When inflation rises and the interest rate hike again, it leads to losses and unemployment
Entrepreneurs decide to set up mistaken projects
It leads to a credit expansion that at last increase unemployment of people working far from the consumption
All the rest
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