Topic 8: Austrian Economics
1. The subjective approach to pricing advocated by Austrian economists suggests that:
(a) the value of anything equals its cost of production. (b) prices should be set by
the government. (c) the value of anything is whatever someone is willing to pay for
it. (d) prices should be determined by voting.
2. The English poet Samuel Butler‟s assertion that “The value of a thing is just as much
as it will bring” is most compatible with: (a) Austrian economic theory. (b) German
historicism. (c) John Locke‟s theory of property rights. (d) Adam Smith‟s theory of
the invisible hand. (e) Aristotle‟s Nichomachean Ethics.
3. According to David Ricardo, differences in land rents depend on differences in
fertility. Johann H. von Thünen instead argued that land rents depend far more on: (a)
the aesthetics of the scenery. (b) location. (c) population density. (d) subjective
4. David Ricardo believed that land rent depends chiefly on relative fertility. Johann H.
von Thünen argued, instead, that the most important determinant of rent is: (a)
population density. (b) aesthetic attractions. (c) location. (d) subjective individual
5. A very early Austrian economist now credited with developing or elaborating early
(and sometimes crude) versions of a number of important aspects of modern theory,
such as the concepts of economic rent, diminishing returns, opportunity costs, the
marginal productivity theory of wages, and the economic theory of location was: (a)
Friedrich von Wieser. (b) Karl Marx. (c) Jules Dupuit. (d) Johann von Thünen. 6. A theory that helps explain why land costs more in downtown Paris than in the
French countryside was developed by: (a) Thomas Malthus. (b) David Ricardo. (c)
Johann H. von Thünen. (d) François Quesnay.
7. A real estate agent who loudly proclaims that property values depend on “first,
location; second, location; and third, location,” is echoing a theory formalized into a
mathematical equation by the pioneering economic thinker: (a) David Ricardo (b)
Henry George. (c) Johann von Thünen. (d) William Stanley Jevons. (e) William Petty.
(f) Edmund Burke.
8. Of the following schools of economic philosophy, the least hostility to the notion that
interest is a legitimate stream of income was expressed by: (a) classical Greek
philosophers. (b) medieval scholastics. (b) early Arabic-Islamic social philosophers.
(c) anarcho-syndicalists. (d) Marxists. (e) early Austrian “marginalists.”
9. Of the following economic thinkers, the one who was least hostile to the notion that
interest is a legitimate stream of income was: (a) Thomas Aquinas. (b) Aristotle. (c)
Ibn Kaldur. (d) Karl Marx. (e) Carl Menger.
10. Losche concluded that the distance-minimizing geometric shape of the territories
most firms control when concentrated in a high traffic area for business is a: (a)
triangle. (b) oval. (c) quadrilateral. (d) hexagon. (c) octagon.
11. One of Hans K.E. von Mangoldt‟s key contributions to economics was his
differentiation between ______ and ______, which hinges on the notion of risk
taking. (a) the interest rate, the rate of return on capital (b) consumer surplus,
producer surplus (c) laborers, business owners (d) capitalists, entrepreneurs 12. Hans K.E. von Mangoldt believed conflict, including wars, to potentially be very
productive. He liked conflict and change as a mechanism for creation. Another
economist who felt conflict was crucial to change was: (a) Joseph Schumpeter. (b)
John Bates Clark. (c) Karl Marx. (d) William Stanley Jevons.
13. An economist who contended that war provides great opportunities for entrepreneurs
to create new technologies was: (a) Richard Cantillon. (b) Joseph A. Schumpeter. (c)
Hans K.E. von Mangoldt. (d) John Bates Clark. (e) Friedrich List.
14. The theorist most likely to agree with the statements: “Wars stimulate technological
advance,” and “History favors the bold,” would be: (a) Hermann Gössen. (b) Jules
Dupuit. (c) Hans K.E. von Mangoldt. (d) Augustin A. Cournot.
15. Hans K.E. von Mangoldt was a pioneer in arguing that human progress arises
primarily from: (a) entrepreneurial innovation. (b) conflicts between socio-economic
classes. (c) expansion of the production data base. (d) a tiny elite group of inventors. 16. Hans K.E. von Mangoldt characterized entrepreneurial profits as the reward for a
range of activities including which of the following: (a) finding particular markets. (b)
clever acquisitions of productive agents. (c) smart combination of factors of
production on the right scale. (d) sales policy and innovation. (e) all of the above. 17. A belief shared by Richard Cantillon and Hans K.E. von Mangoldt is that: (a)
interest rates are unnecessary. (b) demand creates its own supply. (c) large profits
are justified because entrepreneurs are willing to take risks. (d) workers should be
paid more than a subsistence level of wages. (e) the price level is precisely
proportional to the quantity of money in an economy.
18. The least likely of the following economists to have viewed entrepreneurs as creeps
was: (a) Joan Robinson. (b) Thorstein Paul Veblen. (c) Paul Sweezey. (d) Hans K.E.
19. Numerous Austrian economists differ with the neoclassical macroeconomic model
by emphasizing the idea that: (a) supply creates its own demand [Say‟s law]. (b)
wages, prices, and interest rates are flexible. (c) the entrepreneur is the pivotal agent
in economic growth and development. (d) MV= PQ.
20. A school of thought containing several members who focused their analysis heavily
on the long run beneficial roles played by entrepreneurs is: (a) Austrian economics.
(b) institutionalism. (c) Marxism. (d) monetarism.
21. The Austrian School of economic thought is widely acknowledged to have been
born in the writings of: (a) Joseph Schumpeter. (b) Leon Walras. (c) Carl Menger.
(d) Friedrich von Wieser. (e) Otto von Bismark.
22. Carl Menger‟s Principles was intended as a refutation of the school of thought
known as: (a) German historicism. (b) marginalism. (c) neoclassicism. (d)
Keynesian theory. (e) logical positivism. (f) praxeology.
23. The idea that the value of a product depends primarily on the amount a consumer is
willing to pay for it was embraced by: (a) Adam Smith, a Scot. (b) Carl Menger, an
Austrian. (c) Francois Quesnay, a Frenchman. (d) Richard Cantillon, an Irishman
who also held French citizenship. (e) Aristotle and other early Greek philosophers. 24. Adam Smith and Carl Menger agreed that the government‟s involvement in the
economy should be very limited. However, Menger and his Austrian colleagues
probably believed this in part because they perceived markets to be efficient, and in
part because: (a) they believed in the power of the invisible hand as a mechanism
that would overcome raw political power. (b) most were born into the politically-
conservative Austrian or German aristocracy. (c) they were early libertarians who
emphasized freedom above all else. (d) they viewed all government activity as
inherently socialistic. (d) they were quite liberal politically and favored worker
participation in managerial decisions, and thought individuals should be able to
participate in a free market system.
25. Carl Menger and other early Austrian theorists were most vehemently opposed to:
(a) socialism. (b) unrestricted international trade. (c) libertarianism. (d) war as a
mechanism for solving international issues. (e) laissez faire capitalism. 26. The theorist who expanded upon Carl Menger‟s earlier assertions about pricing with
a basic statement of the general law of value and who also invented the term
“marginal utility” was (a) Eugen von Böhm-Bawerk. (b) H. K. E. von Mangoldt. (c)
Friedrich von Wieser. (d) Antoine-Augustin Cournot.
27. The Austrian theorist who coined the term marginal utility though he called it
grenznutzen was: (a) Carl Menger. (b) Johann H. von Thünen. (c) Friedrich von
Wieser. (d) Hans K.E. von Mangoldt. (e) Eugen von Böhm-Bawerk.
28. Friedrich von Wieser is most renowned for his elaborations and extensions of the
theories of: (a) Hermann H. Gössen, by grounding the theory of consumption in the
marginal principle. (b) Carl Menger‟s ideas on utility, value, and input-output. (c)
Antoine Augustin Cournot‟s law of demand. (d) Jules Dupuit, in his theories
29. The phrase “marginal utility” was coined by the Austrian economist: (a) Carl Menger.
(b) Eugen von Böhm-Bawerk. (c) Friedrich von Wieser. (d) Jules Dupuit. 30. Applications of marginal utility to the theory of demand first appeared in the work of
A. Jules. E. Dupuit. The Austrian economic theorist who, until recently, erroneously
received credit for originating the analysis of demand using the concept of marginal
utility was: (a) Johann H. von Thünen. (b) Hans K.E. von Mangoldt. (c) Carl Menger.
(d) Hermann Gössen. (e) Friedrich von Wieser.
31. An Austrian economist focused primarily on capital accumulation and
“roundabout” production was: (a) Carl Menger. (b) Von Wieser. (c) Eugen von
Bohm-Bawerk. (d) William Stanley Jevons. (e) Jules Dupuit.
32. The concept of roundabout production entails: (a) maximization of the production of
capital goods during each production period. (b) investing in capital goods by
postponing consumption, thereby enabling the production of greater amounts of
consumer goods in the future. (c) outsourcing of intermediate goods by a firm that is
not fully integrated. (d) maximizing r + i + π = surplus value.
33. Eugen von Böhm-Bawerk‟s Capital and Interest. (German, 1884) criticized
socialists‟ exploitation theories of interest and profit as unscientific and incorrect. He
termed the exploitation doctrine: (a) the “Worst Fallacy.” (b) “Pathetic
Obscurantism.” (c) “Hypocritical Dogma.” (d) “Economic Theology.” (e) “Nattering
34. Eugen von Böhm-Bawerk extensively researched and published a three-volume set of
books that focused primarily on: (a) national income and unemployment (b) marginal
utility and Aggregate Demand. (c) capital and interest. (d) economic equity and
efficiency. (e) inflation and the quantity theory of money.
35. Eugen von Böhm-Bawerk‟s contributions to economic theory did not include the
notion that: (a) capital reproduces itself [i.e., it “breeds”]. (b) demand is based on
marginal utility. (c) interest is a reward for postponing production. (d) economic
capital facilitates increased output through “roundabout production”.
36. In The Positive Theory of Capital, Eugen von Böhm-Bawerk elaborated a theory of
interest based on the notion that current goods are subjectively worth more than
future goods of the same kind. This theory suggests that an individual will prefer:. (a)
$1 today over $1 tomorrow. . (b) $1 next year over $1 this year. . (c) $3 next year
over $1 yesterday. (d) $20 in 1950 over $200 in 2004.
37. Eugen von Böhm-Bawerk suggested that the production period should be measured
as an: (a) average production period where inputs are weighted according to their
proximity to point outputs. (b) absolute production period where length of production
is measured from beginning to the end. (c) approximate point production period
where a certain point in production is picked to determine what the production period
38. According to Eugen von Bohm-Bawerk , among factors that determines the interest
rate is: (a) average preferences for goods now over goods in the future. (b) the
interest rate on treasury bonds. (c) the FED‟s open-market operations. (d) the
condition of the stock market.
39. The thinker who would most strongly have disagreed with a statement that
“charging interest on loans is unethical because loans do not facilitate the
production of valuable goods” would have been: (a) Karl Marx. (b) Eugen von
Böhm-Bawerk. (c) Thorstein Veblen. (d) Aristotle. (e) Thomas More.
40. According to Eugene von Böhm-Bawerk, the “province of the Austrian economist”
is: (a) theory. (b) history. (c) utility. (d) calculus.
41. The theory of interest was not among areas in which significant contributions were
made by: (a) Eugen von Böhm-Bawerk. (b) Frank H. Knight. (c) Knut Wicksell. (d)
David Ricardo. (e) Herbert Spencer.
42. The economist least closely associated with Carl Menger and the Austrian school
would be: (a) Alfred Marshall. (b) Friedrich von Wieser. (c) Eugene Böhm-Bawerk.
(d) Ludwig von Mises. (e) Joseph Schumpeter.
43. Austrian economics is fundamentally opposed to the measurement concept
pioneered by the mercantilist thinker William Petty because, in the Austrian view:
(a) aggregated economic statistics are flawed because of biases in reporting, among
other difficulties. (b) economic statistics must be used to support good abstract
theories. (c) good abstract theories must be consistent with historical events. (d)
effective macroeconomic planning depends on solid statistical analysis. 44. Members of the Austrian school of thought do not: (a) focus on the subjective
nature of demand. (b) view the supply of capital as positively related to the interest
rate. (c) assume that people act in purposeful ways to accomplish their goals. (d)
view Joseph Schumpeter and Eugen von Böhm-Bawerk as its founders. (e) ever use
calculus to illustrate their models.
45. One foundation of Austrian economics is radical subjectivism, which does not
include an assumption that: (a) entrepreneurial decision-making lies at the heart of
innovation. (b) human choice is the foundation of permanent relations. (c) people
typically share uniform knowledge and expectations about market conditions. (d)
knowledge and interpretations form the basis for and individual‟s tastes and
46. Austrian economics departs most sharply from neoclassical value theory. (e.g.,
Jevons and Marshall) on assumptions about: (a) marginal utility. (b) opportunity
costs. (c) maximization processes. (d) the subjectivity of utility. 47. Among distinguishing features of Austrian economics is an assumption that human
action is purposive–individuals make decisions with goals in mind, even though
sometimes frustrated by errors and imperfect knowledge. This idea is least
consistent with the view of behavior expressed by: (a) William Stanley Jevons. (b)
Alfred Marshall. (c) Joseph Schumpeter. (d) Jeremy Bentham.
48. The entrepreneur is the chief agent of change in a competitive economy, or the
“persona causa of economic development,” according to the Austrian economist: (a)
Joseph A. Schumpeter. (b) Ludwig von Mises. (c) Friedrich A. Hayek. (d) Oskar
49. An economist who followed in the tradition of Richard Cantillon and Hans K.E.
von Mangoldt in glorifying entrepreneurs as the driving forces in economic
development, and who also suggested that as democracy increases, socialism will
tend to displace capitalism, was: (a) Johann H. von Thünen. (b) Ludwig von Mises.
(c) Friedrich Hayek. (d) Jon von Neumann. (e) Wernher von Braun. (f) Claudius
von Disputandum. (g) Joseph Schumpeter.
50. Capitalism continually revitalizes itself through creative destruction, in which
entrepreneurial innovations obliterate obsolete technologies and institutions and
pave the road to progress, according to the writings of: (a) Joseph A. Schumpeter.
(b) Herbert Spencer. (c) John R. Commons. (d) William Stanley Jevons 51. One Austrian economist, when young, agreed to head a commission to study the
nationalization of industry for the newly socialist German government. When
questioned about how someone who so praised capitalism and individual enterprise
could take part, he answered, “If someone wants to commit suicide, it is a good
thing if a doctor is present.” He was: (a) Carl Menger. (b) Friedrich von Wieser. (c)
Eugen bon Böhm-Bawerk. (d) Joseph Alois Schumpeter. (e) Friedrich List. 52. In Joseph Schumpeter‟s The Theory of Economic Development, business cycles and
irregular economic growth are described as among the consequences of: (a)
technical and financial innovations of entrepreneurs. (b) erratic growth of the
money supply. (c) class conflict. (d) overinvestment in capital. (e)
underconsumption caused by inequality in the distribution of income. 53. Joseph Schumpeter‟s principle of creative destruction is not exemplified by: (a) the
loss of secretarial jobs after the advent of computing. (b) the growth of tire and oil
industries after the invention of the internal combustion engine. (c) the emerging
obsolescence of VHS. (d) the concentration of industry in large multinationals. 54. The idea that capitalism cannot survive in the long run is a central conclusion in the
theories of Karl Marx and: (a) Joseph Schumpeter. (b) Carl Menger. (c) Thorstein
Veblen. (d) Eugen von Böhm-Bawerk. (e) Friedrich Hayek.
55. Karl Marx and Joseph Schumpeter had very different perceptions about the virtues
of capitalism, but their views are in accord in predicting that: (a) social forces will
cause capitalism to be replaced by socialism. (b) economic progress depends on
ambitious entrepreneurs. (c) the working class will eventually resort to armed
conflict to overthrow the government. (d) the gold standard was doomed by
unavoidable inflationary pressure.
56. Most modern economists would identify as the world‟s two most influential
economic theorists over the period 1900-1950 to have been: (a) John Maynard
Keynes and Joseph Schumpeter. (b) Joan Robinson and Edwin Chamberlin. (c)
Ludwig von Mises and Thorstein Veblen. (d) John Commons and Wesley Clair
57. Which set of economists is out of chronological order? (a) Ricardo / Marx / Jevons /
Veblen (b) Mandeville / Smith / Walras / Keynes. (c) Malthus / Mill / Edgeworth /
Fisher (d) Hume / Aquinas / Marshall / Schumpeter.
58. The “Socialist Calculation Debate” refers to a disagreement between Austrian
theorists and advocates of socialism about whether capitalism: (a) must eventually
evolve into socialism. (b) or socialism allocates resources more efficiently. (c) or
socialism is more compatible with maximizing freedom. (d) is a necessary stage in
the long run transition to socialism. (e) yields more rapid economic growth than
59. Ludwig von Mises disagreed with the neoclassical conclusion that “money is a
veil,” arguing that inflation: (a) drives up the transaction costs of international trade.
(b) is an uneven process that disrupts planning by consumers and business investors.
(c) offsets wage-price stickiness, facilitating equilibration of relative prices. (d)
confuses people about the real value of money in the market period.
60. Ludwig von Mises rejected the neoclassical conclusion that “money is a veil,”
arguing instead that: (a) the money supply directly impacts natural resources. (b)
inflation matters because it is uneven and causes uncertainty (c) uneven foreign
exchange rates reduce the gains from international trade. (d) a barter system is more
efficient than a monetary system.
61. The Austrian economist least single-mindedly focused on microeconomic aspects of
resource allocation was: (a) Ludwig von Mises. (b) Carl Menger. (c) Gossen. (d)
Leon Walras. (e) Friedrich von Wieser.
62. Austrian monetary theory and Austrian value theory were first reconciled and most
completely integrated by: (a) Carl Menger. (b) Ludwig von Mises. (c) Thorstein Veblen.
(d) Murray Rothbard.
63. Austrian economists view costs as all of the following EXCEPT: (a) a decision. (b)
subjective. (c) perceived by the chooser. (d) an event or thing. (e) subordinate to utility. 64. The view that events affect costs is contrary to the ideas of: (a) Austrian economics. (b)
Walrasian general equilibrium. (c) Joan Robinson‟s theories of oligopoly. (d)
Marshallian partial equilibrium analysis. (e) Keynesian macroeconomics. (f) Marxist
theory. (g) public choice analysis.
65. Joseph Schumpeter‟s version of the Austrian school of economic thought emphasizes
that major disruptions to "purely" competitive markets arise from: (a) profit
maximization by imitative firms. (b) entrepreneurial innovations. (c) job training by
workers. (d) laissez-faire government policies.
66. Not one of Schumpeter‟s three corresponding pairs of opposites would be: (a)
entrepreneurship vs. management. (b) static vs. dynamics. (c) circular flow vs.
change in economic routine. (d) evolution vs. determinism.
67. The economist who became finance minister of the Austria while quite young,
emigrated to the United States to avoid Hitler, and who was a student of Eugen von
Böhm-Bawerk was: (a) Joseph Schumpeter. (b) Max Weber. (c) Claude Levi-Strauss.
(d) Arthur C. Pigou.
68. Emerging modern theories of how a backward economy can shift to a path of
dynamic growth rely most heavily on insights into entrepreneurship and capitalism
written by: (a) Irving Fisher. (b) Joan Robinson. (c) Joseph A. Schumpeter. (d) John
Bates Clark. (e) Leon Walras.
69. The writer who described capitalism as a process of creative destruction and called
the entrepreneur “the white hot fire that drives capitalism forward” was (a) John
Stuart Mill (b) Carl Menger. (c) St. Thomas Aquinas. (d) Joseph A. Schumpeter. (e)
William Stanley Jevons.
70. According to Joseph Schumpeter, entrepreneurs who launch major innovations spark
economic activity primarily by stimulating: (a) huge profits for capitalists. (b) related
inventions and innovations, and new industries. (c) long waves. (d) business
optimism. (e) monopoly power that exploits workers, thereby accelerating investment
71. Important works by Joseph Alois Schumpeter do not include: (a) Capitalism, Socialism,
and Democracy. (b) Individualism and Economic Order. (c) A History of Economic
Analysis. (d) The Theory of Economic Development.
72. In Business Cycles. (1939), Joseph Schumpeter argued that innovations tend to be
bunched at certain times – one leading to another – creating large _________ booms
that promote long periods of prosperity.: (a) productivity. (b) capital spending. (c)
consumer spending. (d) savings. (e) investment.
73. Joseph Schumpeter‟s theory of creative destruction – the idea that the discovery of new,
beneficial technologies will also result in the loss of jobs and equipment in obsolete
industries – was viewed by Schumpeter as one of the prices we pay for the dynamic
progress possible under: (a) capitalism. (b) Marxism. (c) socialism. (d) libertarianism.
74. Joseph Schumpeter‟s theory that capitalism continually revitalizes itself by replacing
old products, technologies, organizations, and leaders with new is known as: (a)
creative response. (b) economic replacement. (c) creative destruction. (d) economic
displacement. (e) creative renewal.
75. Schumpeter believed the success of capitalism in producing massive amounts of goods
and services would ultimately result in: (a) explosive business cycles in post-modern
capitalist economies. (b) ever-increasing concentration in capital-intensive industries. (c)
the gradual erosion of entrepreneurship and eventual triumph of socialism. (d) ever
worsening immiseration of workers. (e) sudden “shocks” in oversupplies of goods and
76. The term “creative destruction” was used by Schumpeter when celebrating the virtues
of: (a) socialism. (b) libertarianism. (c) monopolies. (d) capitalism.
Important works by Joseph Alois Schumpeter do not include: (a) Capitalism, Socialism, and 77.
Democracy. (b) The General Theory of Employment, Interest and Money. (c) The Theory of
Economic Development. (d) A History of Economic Analysis. (e) Business Cycles.
78. Say that, after examining the writings of Jules Vern and the life of Jacques Cousteau,
we advance a theory of exploration stating that it is only those daring few
adventurous spirits (Ferdinand Magellan, Sir Edmund Hillary, Neil Armstrong) who
expand the environments which humans are bold enough/able to inhabit. This theory
of exploration (let‟s call it the “Growth in Habitable Environments Theory”) is most
similar to the theory of economic growth associated with: (a) Adam Smith. (b)
Joseph Schumpeter. (c) endogenous growth theory. (d) Robert Merton Solow. (e)
John Stuart Mill.
79. Which person below would George Gilder probably most admire for his vision of a
changed world? (a) George Bush for fighting terrorists. (b) Sadam Hussein for
rallying al Qaeda and refusing to step down. (c) Bill Gates and his vision of
Microsoft software being used in every home. (d) Donald Trump for his vision of a
real estate empire.
th80. A 20 century debate between Keynes and Schumpeter about desirable roles for
government echoed positions from earlier schools of thought. Keynes‟ perception of a
need for government stabilization reflected calls for market management voiced earlier
by __________. Similarly, Schumpeter‟s reliance on freedom and entrepreneurship.
(although he recognized its dangers) is reflected in __________.: (a) classical
economics / institutionalists. (b) historicists / Ancient Greeks. (c) classical economics /
scholastics. (d) scholastics / socialists. (e) the Ancient Greeks / neoclassical economics. 81. The second-generation Austrian economist who was a teacher of Friedrich Hayek
was: (a) Ludwig von Mises. (b) Fritz Machlup. (c) Joseph Schumpeter. (d) Ludwig
82. NOT one of the five major points that distinguish Austrian economics from
mainstream neoclassical analysis is: (a) radical subjectivism. (b) methodological
essentialism. (c) casual-geneticism. (d) methodological individualism. (e) societal
83. Basic to the Austrian approach is the conviction that all underlying permanent
relations of economic theory are consequences of: (a) societal patterns. (b)
consumer needs. (c) demand theory. (d) market demand. (e) human choice. 84. The Austrian concept least congruent with the strict Marshallian tradition would be
the idea that: (a) costs are subjective. (b) prices are objective. (c) general
equilibrium analysis is more incisive and insightful that partial equilibrium analysis.
(d) the consumer has total power over market prices.
85. Austrian economists would probably disagree most vigorously with the basic
methodology and premises of the philosophy of: (a) Immanuel Kant. (b) William
Stanley Jevons. (c) Aristotle. (d) Jeremy Bentham. (e) Carl Menger. (f) Aristotle
86. A feature of Ludwig von Mises‟ version of Austrian money theory distinguishing it
from theories advanced earlier by John Locke and David Hume is his: (a)
recognition of the uniqueness of money to facilitate immediate exchange [spot
markets]. (b) view that, in general equilibrium, money is indistinguishable from
non-money goods. (c) observation that money is unique in its intertemporal
exchangeability. (e) theory assumes that money is worthless due to the volatility of
87. Ludwig von Mises did not cite as a source of the value of money: (a) subjective
perceptions of money as having value. (b) the goods it can buy. (c) the interest it
can generate. (d) the question is misleading because von Mises did not address the
value of money.
88. Ludwig von Mises called the characteristic ability of money to be exchanged for
other things, money‟s (a) subjective exchange value. (b) objective exchange value.
(c) solitary exchange value. (d) neutrality exchange value. (e) transaction exchange
89. Ludwig von Mises claimed that there is a failure “to explain the mechanism of
variations in the value of money” in the: (a) game theory approach to monetary
exchange. (b) quantity theory of money. (c) Ricardian theory of money. (d) utility
theory of money. (e) scholastic theory of money.
90. The theoretical attack launched by Austrian economists in the 1920s against central
planning and socialism in the USSR was initially spearheaded by: (a) Friedrich
Hayek. (b) H. L. Mencken. (c) Ludwig von Mises. (d) Iosif Djugashvili. (e) Lev
Davidovitch Bronstein. (f) Vladimir Ulyanov.
91. Ludwig von Mises‟ theory of money set the stage for Friedrich Hayek to develop
his: (a) monetary analysis. (b) valuation analysis. (c) dynamic analysis (d) theory of
business cycles. (b) natural rate hypothesis.
92. Friedrich Hayek argued that equilibrium in capital markets results from interactions
between the activities of: (a) stockholders and bondholders. (b) savers and investors.
(c) lender and borrowers. (d) managers and unions.
93. The economist would have been considered part of the “Vienna circle” along with
Ludwig von Mises would be: (a) Carl Menger. (b) Joseph A. Schumpeter. (c) Karl
Marx. (d) Gustav Schmoller. (e) Werner Erhardt.
94. Austrian economists identified five major points that distinguished Austrian
economics from mainstream neoclassical analysis. The assertion that Austrian
economics emphasizes essences rather than functional relationships is called: (a)
radical subjectivism. (b) purposiveness in human action. (c) methodological
individualism. (d) casual geneticism.
95. The school of thought that embraces the ideas of methodological individualism and
radical subjectivism as keys for relevant economic analysis is: (a) Keynesian theory. (b)
modern monetarism. (c) Austrian economics. (d) neoclassical monetarism.