Quiz: On the Principles of Political Economy and Taxation

All 48 questions. A perfect score earns the gold medal; 80% earns silver.

1. 1. When a war is financed by a loan of twenty millions, what does Ricardo say is the real expense to the nation?

   The interest plus the sinking fund The annual interest of one million The twenty millions spent Nothing, since the debt is owed to ourselves
2. 2. Against Adam Smith, which coal mine does Ricardo say regulates the price of coal?

   The most fertile mine The least fertile mine in use The mine nearest the market The mine owned by the landlord
3. 3. Which historical puzzle does Ricardo think his point about taxes and relative prices explains?

   Uneven price rises under the bank-restriction Why Holland’s manufactures and fisheries declined Why corn prices fell so sharply after the peace of 1815 Why the taille ruined French agriculture under the old kings
4. 4. According to Ricardo, on whom does a tax on rent, strictly so called, fall?

   Wholly on landlords On farmers, through lower profits On consumers of corn, through a higher price On labourers, through lower wages
5. 5. In the passage from Malthus that Ricardo quotes, what does Malthus call the price of labour?

   The regulator of rent The natural and true measure of all value The invariable standard of riches A most important political barometer
6. 6. According to Ricardo, who has a permanent interest in bounties on corn exports and prohibitions of corn imports?

   Manufacturers Farm labourers Tenant farmers Landlords
7. 7. Why does Ricardo reject Smith’s proposal to tax ground rents exclusively?

   Such a tax would raise the price of corn and so the wages of labour Ground rents are too small to yield much revenue It would unjustly burden one class and violate security of property It would fall on the occupiers of houses
8. 8. What does Ricardo propose for the Poor Laws?

   Replacing them with a minimum wage set by Parliament Extending relief to every labourer in proportion to his family Raising the poor rate as a single national fund Their gradual abolition
9. 9. Who, in Ricardo’s view, ultimately pays tithes?

   The consumer of raw produce The church, through lower collections The farmer, through lower profits The landlord, through lower rent
10. 10. Who, according to Ricardo, are the only real gainers as wealth and population increase?

    The labourers The landlords The manufacturers The stockholders
11. 11. What does Ricardo say checks the natural tendency of profits to fall?

    The growth of foreign trade in luxuries such as silks and wines Improvements in machinery and discoveries in agriculture A rise in the rate of interest Increases in the quantity of money
12. 12. What is the immediate effect of agricultural improvements on rent?

    They abolish rent altogether They have no effect on rent They raise rent They lower rent
13. 13. Provided rent and profits are the same, what does Ricardo say is of no importance to a nation?

    Whether its currency is paper or gold Whether its land is fertile Whether it has ten or twelve million inhabitants Whether it trades abroad at all, or only within its own borders
14. 14. What happens to the labourer as corn becomes dearer, according to Ricardo?

    Both his money and corn wages rise Nothing, because wages are fixed by custom His money wages fall but his corn wages rise His money wages rise but his corn wages fall
15. 15. What is Ricardo’s view of utility in relation to exchangeable value?

    It is the measure of exchangeable value It has nothing to do with exchangeable value It is essential to value but not its measure It determines value for manufactured goods only
16. 16. What does Ricardo criticise Adam Smith for doing?

    Using corn or labour commanded as a standard measure of value Treating rent as a component of wages Denying that labour is the source of value Ignoring the role of money and credit altogether in his account of value
17. 17. In Ricardo’s example of a manufacturer selling his goods for £1000, what is the effect of a rise in wages?

    Profits and wages rise together Rents fall Prices rise by the same amount Profits fall
18. 18. Which ruler does Ricardo imagine owning all the gold mines and taxing their produce?

    The King of Spain The Emperor of Brazil The King of Portugal The King of France
19. 19. In Ricardo’s example of a 10s. export bounty on English corn, how much does France gain on each quarter it imports?

    15s. 10s. Nothing 5s.
20. 20. When, according to Ricardo, is a currency in its most perfect state?

    When gold and silver coin are both legal tender at a fixed ratio When the Bank of England issues notes freely, unchecked by convertibility When it is all paper, of equal value with the gold it represents When it consists wholly of gold coin of full weight and fineness
21. 21. What new chapter does Ricardo announce for the third edition?

    A chapter on the rent of mines A chapter on machinery A chapter on colonial trade A chapter on the Poor Laws
22. 22. What did Ricardo argue that the unfavourable exchange with Hamburg showed about English paper money?

    That Hamburg money had risen in value That it was depreciated That English gold had fallen in value That the balance of trade was permanently against England
23. 23. How, according to Ricardo, is capital usually moved from a less to a more profitable trade?

    By workers moving from one trade to another By government direction of investment By lending from bankers and the moneyed class shifting between trades By manufacturers closing their businesses and starting afresh in other trades
24. 24. In Ricardo’s example, what happens to the exchange of deer for salmon when wages rise in both occupations?

    Deer become dearer than salmon Salmon become dearer than deer Both rise in value against gold It stays at one deer for two salmon
25. 25. What is the relation between rent and the price of corn, according to Ricardo?

    Rent lowers the price of corn Rent is paid because corn is high, not the reverse Rent and the price of corn are wholly unconnected with each other Corn is high because rent is paid
26. 26. What does Ricardo say caused the crisis of 1797?

    A failed harvest The Bank’s large advances to Pitt’s government during the war Over-issue of notes by the country banks of England A panic among the timid part of the community
27. 27. Whom does Ricardo credit with presenting “the true doctrine of rent” in 1815?

    Turgot and Sir James Steuart Sismondi and David Buchanan Adam Smith and J.-B. Say Malthus and a Fellow of an Oxford college
28. 28. What spending by the rich does Ricardo say labourers should prefer?

    The support of menial servants rather than luxuries Saving rather than any spending Foreign travel Luxuries such as furniture and fine clothes rather than servants
29. 29. Which writer’s example of scarce water does Ricardo use to separate value from riches?

    Mr. Buchanan’s M. Destutt de Tracy’s Adam Smith’s Lord Lauderdale’s
30. 30. What does Ricardo infer from Smith’s account of commercial treaties?

    That treaties raise profits in both countries alike That a mother country may benefit by oppressing her colony That colonies always gain from monopoly That free trade harms the mother country
31. 31. What does Ricardo think would happen at first if potatoes became the general food of the people?

    Rents would immediately rise on the best potato land Corn would become dearer Wages would rise sharply Much land would be abandoned and rent would fall
32. 32. In Ricardo’s example, how many men’s labour for a year does Portugal need to produce its wine and its cloth?

    120 for wine and 100 for cloth 80 for wine and 90 for cloth 90 for wine and 80 for cloth 100 for wine and 120 for cloth
33. 33. When does Ricardo say foreign trade raises the rate of profits?

    Only when the imported goods are those on which wages are spent Never, under any circumstances Whenever luxuries such as wine, velvets and silks become much cheaper Whenever a new market is discovered
34. 34. What does Ricardo now conclude about the labouring class’s belief that machinery is often detrimental to them?

    It is true only of the agricultural labourers It is founded on mere prejudice and a misunderstanding of trade It applies only during wars It agrees with sound political economy
35. 35. How does Ricardo characterise rent in his reply to Malthus?

    A deduction from wages A creation of wealth, but not of value A creation of value, but not of wealth A clear gain and new creation of riches
36. 36. How does Ricardo define the natural price of labour?

    The value of everything the labourer produces The price that lets labourers subsist and keep their numbers neither rising nor falling The price actually paid for labour, set by supply and demand in the market The wage fixed each year by the justices of the peace in each county at quarter sessions
37. 37. According to section IV, how does a rise in the value of labour affect goods made with much fixed capital?

    They rise in value in proportion to the rise of wages Their value is unaffected Their exchangeable value falls relative to other goods Their exchangeable value rises relative to other goods
38. 38. Whose argument does Ricardo accept that capital can never be in general surplus, because demand is limited only by production?

    Adam Smith’s J.-B. Say’s Thomas Malthus’s Lord Lauderdale’s
39. 39. How does Ricardo define rent?

    Payment for the soil’s original powers Interest on capital laid out in improving the land and its buildings The profit of the farmer above his wages Whatever a farmer pays his landlord each year
40. 40. For which commodities does Ricardo accept that price follows the proportion of supply to demand?

    Manufactured goods under competition Corn Gold and silver Monopolised commodities
41. 41. Among which three classes does Ricardo say the produce of the earth is divided?

    The crown, the church, and the people Landlords, owners of capital, and labourers Merchants, manufacturers and farmers Producers, consumers, and the state
42. 42. In Ricardo’s example, what sum does the farmer always obtain after paying rent, whatever the price of corn?

    £480 £1800 £720 £240
43. 43. Who pays a tax on raw produce, according to Ricardo?

    The consumer, through a higher price The farmer, through lower profits on his capital The labourer, through lower wages The landlord, through a lower money rent
44. 44. What does Ricardo conclude a tax on wages really is?

    A tax on profits A tax the labourer alone must bear A tax on the consumer of manufactures A tax on rent
45. 45. Whose four maxims of taxation does Ricardo quote in the chapter on the land-tax?

    David Buchanan’s J.-B. Say’s Adam Smith’s Thomas Malthus’s
46. 46. Which goods does Ricardo say have a value determined by scarcity alone?

    Rare statues and pictures, scarce books and coins Fine cotton goods and woollens made by hand Corn and the other raw produce of the soil Gold and silver, the precious metals used as money
47. 47. What do natural agents such as wind and water add to commodities, according to Ricardo?

    Both kinds of value equally Value in use, but not exchangeable value Exchangeable value, but not value in use Neither kind of value
48. 48. According to Ricardo, on what does the natural price of labour “essentially depend”, beyond the price of food?

    The habits and customs of the people The quantity of gold in circulation The strength of workers’ combinations The rate of interest