Understanding Economics

Lesson 1: The Basics. Economic Definitions.

Please read the Introduction, chapters 1 - 2, "Why Henry George..." and Economic Definitions
And give our Interactive sorting exercise a try!

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1. According to Henry George, what are two ways in which political economy differs from other sciences?           | Text |

2. What two basic problems has political economy always sought to explain and remedy?            | Supplement |

3. In recent years, what third fundamental problem has taken its place beside those two?           | Supplement |

4. Complete this statement of the fundamental principle of political economy. People seek to satisfy their own desires            | Supplement |

a. for power and influence first.
b. at the expense of others' desires.
c. as quickly as possible.
d. with the least irksome toil.
e. by cooperating with others.
5. What concept is missing from the "problem of scarcity" as it is construed by mainstream economics?            | Supplement |

6. Name the three factors of production, and explain how they are mutually exclusive.            | Supplement |

7. Which of the following is an essential characteristic of wealth in political economy?            | Text | Supplement |

a. It gives its owner higher social status.
b. People are willing to exchange their labor for it.
c. It can be used to settle debts.
d. It is necessary for survival.
8. Which of the following is not an essential characteristic of wealth in political economy?            | Text | Supplement |

a. It satisfies human desires.
b. It exists independently of human labor.
c. It is a material thing.
d. It has a price.
9. Describe some of the confusions and ambiguities that surround the use of the term "wealth" by economists.            | Supplement |

10. The process of production is completed when            | Text |

a. all desires are satisfied.
b. there is no more unemployment.
c. wealth reaches the ultimate consumer.
d. goods leave the factory.
e. that steam whistle blows.
11. In economics, a thing has value when            | Supplement |

a. it has a price tag.
b. the government taxes it.
c. an individual wants to have it.
d. people will exchange goods or labor for it.
e. people are employed making it.
12. In political economy, money            | Text |

a. is absolutely necessary.
b. is the root of all evil.
c. isn't important; it all cancels out in the long run.
d. is not wealth.
e. must be stored up in order to pay wages.
13. This course keeps repeating the phrase "in political economy" because            | Supplement |

a. wealth distribution is our primary concern.
b. this is a political economy course.
c. political action is essential to economic justice.
d. different studies sometimes define terms differently.
e. all of the above.