Exercises 3

 

A) Please read the following expressions and statements and decide whether they belong to the vocabulary of an economist or a political economist.

 

Q1: The market is composed of impersonal forces. (p. 38) ECONOMICS

 

Q2: The market is a socio-political system populated by powerful actors. (p. 38) POLITICAL ECONOMY

 

Q3: The market is composed of such powerful entities as giant corporations and labour unions. (p. 38) POLITICAL ECONOMY

 

Q4: Individual actors such as consumers, producers and even states have only limited or no control at all over the market. (p. 38) ECONOMICS

 

Q5: Powerful market actors can influence significantly the policies of the state. (p. 38) POLITICAL ECONOMY

 

Q6: The market is a self-regulating and self-contained system. (p. 38) ECONOMICS

 

Q7: Economic actors are price-takers. (p. 38) ECONOMICS

 

Q8: Institutions can have a significant influence in determining economic behaviour and outcomes. (p. 39) BOTH

 

B)  Which of the following statements are true?

 

Q1: According to the neoinstitutionalists, institutions are created in order to solve economic problems. True

 

Q2: According to the neoinstitutionalists, institutions are not able to increase the efficiency of resource allocation in a market economy. False

 

Q3: According to the neoinstitutionalists, by creating corporations, transaction costs can be reduced. True

 

Q4:According to the neoinstitutionalists, institutions are created by mere chance and random choices. False

 

Q5: According to the public choice school, institutions are created by atomised individuals. False

 

Q6: According to the public choice school, institutions are created in order to promote the self-interest of powerful lobbies, politicians, etc. True

 

Q7: According to the public choice school, institutions are rational inventions. True

 

 

C)  Which of the following statements are correct?

 

Q1: According to political economists, institutions are created for various reasons, motivated by rational, irrational or even capricious actions. True

 

Q2: According to political economists, institutions are always the result of a historical accident. False

 

Q3: According to political economists, it is relatively unproblematic to replace an inefficient institution with another one. False

 

Q4: According to political economists, we are living in a world where inefficient institutions do exist. True

 

D)  Please read the following statements and decide whether they belong to the vocabulary of an economist or a political economist.

 

Q1: International economy emerges spontaneously without creating losers. (p. 42) ECONOMICS

 

Q2: The creation of an open international economy has advantages – but it is also associated with costs. (p. 42) POLITICAL ECONOMY

 

Q3: A clear commitment to free trade. (p. 45) BOTH

 

Q4: The commitment to free trade should not be based on a concept of national interest. (p. 45) ECONOMICS

 

Q5: The creation of an open world economy requires the existence of a powerful “hegemon”. (p. 43) POLITICAL ECONOMY

 

Q6: Without strong and dominant leaders in the world economy, there would be no real chance for cooperation among egocentric, selfish states. (p. 44) POLITICAL ECONOMY

 

Q7: After World War II, such a dominant power was the USA, which launched a concerted effort to create an open international economy. (p. 43) POLITICAL ECONOMY

 

Q8: Politics and therefore politicians do not have a say in formulating international economy. (p. 44) ECONOMICS