Quiz: The Wealth of Nations

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

1. 1. According to Smith, civil government, so far as it is instituted for the security of property, is in reality instituted for what?

   The protection of the poor against the oppression of the rich The defence of the rich against the poor The defence of the society against foreign invasion The encouragement of manufactures and foreign trade
2. 2. What does Smith say most of the public professors at Oxford have done ‘for these many years’?

   Lectured only in Latin and Greek Lived entirely on the fees paid by their own students Given up altogether even the pretence of teaching Taught nothing but Newtonian physics
3. 3. According to Smith, what kind of lending keeps a bank’s coffers "equally full", like a water-pond with a stream running in as fast as one runs out?

   Lending to government against the land and malt taxes Discounting circulating bills drawn and redrawn between Edinburgh and London Advancing capital for land improvement on good security Discounting real bills, paid when they fall due
4. 4. Which two events does Smith call "the two greatest and most important events recorded in the history of mankind"?

   The discovery of America and of the Cape route to the East Indies The fall of the Western Roman Empire and the invention of printing The act of navigation and the union of the parliaments of England and Scotland The Reformation and the discovery of America
5. 5. Why, according to Smith, must ‘negligence and profusion’ prevail in the management of a joint-stock company?

   Its partners are liable for its debts to the whole extent of their fortunes Its shares can never be sold to anyone else Its directors manage other people’s money rather than their own It is always run by commissioners appointed by the Crown
6. 6. Which order of society does Smith say has an interest “never exactly the same with that of the public”?

   Those who live by rent Those who live by profit Those who live by wages Those who live by taxes
7. 7. How does Smith distinguish fixed capital from circulating capital?

   Fixed capital is lent out at interest; circulating capital is employed by its owner himself Fixed capital is owned by landlords; circulating capital by merchants Fixed capital lasts longer than a year; circulating capital is consumed within a year Fixed capital yields profit without changing masters; circulating only by changing hands
8. 8. In Book II, chapter 2, what does Smith call "the great wheel of circulation", which forms no part of the revenue of the society?

   The national debt The carrying trade The fixed capital of manufacturers Money
9. 9. How does Smith describe the natural price?

   As the price fixed by statute and corporation laws As the highest price that can be squeezed out of buyers in a scarcity As the central price to which market prices continually gravitate As the price set by the quantity of silver contained in the current coin
10. 10. Why does Smith call the Navigation Act “perhaps, the wisest of all the commercial regulations of England”?

    Because it ended England’s wars with Holland Because it raised the most revenue for the customs Because defence matters more than opulence Because it made British goods cheaper in foreign markets
11. 11. Why does Smith count a linen shirt among the necessaries in eighteenth-century Europe?

    Because linen is taxed so heavily that its price regulates wages Because the poor need it to keep their wages up in competition for work in the towns Because the northern climate makes linen next to the skin indispensable to health Because custom makes it shameful even for the poorest to appear in public without one
12. 12. How does Smith compare the rent of coal mines with the rent of an estate above ground?

    Coal mines commonly pay half their gross produce in rent, and sell for more years’ purchase than land Coal mines and land pay about the same share, and sell at the same number of years’ purchase A mine commonly pays a tenth of its produce, land a third; mines sell at fewer years’ purchase Coal mines pay a fixed money rent every year, while the rent of land varies with each year’s crop
13. 13. How, according to Smith, does rent enter into the price of commodities differently from wages and profit?

    Rent determines price, while wages and profit are its effects Rent is always exactly a third of the price of every commodity sold Rent enters the price only of manufactured goods Wages and profit are causes of high or low price; rent is its effect
14. 14. According to Smith, how do many people in the capital experience a war paid for by borrowing?

    They emigrate to escape conscription They suffer heavy new taxes at once, and soon clamour loudly for peace They lend their savings to the government at interest out of patriotism They feel little burden and enjoy reading of the war in the papers
15. 15. According to Smith, why was the Bank of Amsterdam established in 1609?

    To issue banknotes that would replace coin in everyday circulation To lend capital to the Dutch East India Company for fitting out its voyages to the Indies To raise loans for the war against Spain To give merchants money of certain value, since worn foreign coin had debased the currency
16. 16. How does Smith compare the effect on prices of a rise in wages with that of a rise in profits?

    Both raise prices in the same arithmetical proportion Wages act like simple interest, profits like compound interest A rise in profits has no effect on prices Wages act like compound interest, profits like simple interest
17. 17. Which pair does Smith use to show that value in use and value in exchange can diverge?

    Bread and French wines Water and diamonds Iron and gold plate Corn and silver plate
18. 18. What does Smith name as the two great causes of the prosperity of all new colonies?

    Exclusive companies, and bounties on their produce Slave labour, and a monopoly of the home market Plenty of good land, and liberty to manage their own affairs their own way Gold and silver mines, and the protection of the mother country
19. 19. Why, according to Smith, do masons and bricklayers earn more than most manufacturing journeymen?

    They are trusted with costly materials, and so must be men of known honesty Their trade is far harder to learn than any manufacture and needs a long apprenticeship Their work stops in bad weather and depends on occasional calls, so pay must cover idle time Their corporations restrict the number of apprentices and so keep their numbers low
20. 20. Why does Smith think the interest of money a less proper subject of direct taxation than the rent of land?

    Interest is already taxed through the stamp duties on bonds Taxing interest would immediately raise the rate of interest in proportion to the tax Interest is not a neat produce but a compensation for the risk and trouble of employing stock Capital is hidden and fluctuating, and can be moved abroad while land cannot
21. 21. Which of these is not one of Smith’s reasons why masters usually win wage disputes?

    The law prohibits workers’ combinations but not masters’ Workmen are forbidden by law to change their trade Masters are fewer and can combine more easily Masters can live a year or two on their stock, while workmen could not last a week or a month
22. 22. Founding a great empire to raise up a people of customers is, Smith says, a project extremely fit for what?

    A republic of yeoman farmers with plenty of cheap, good land A nation whose government is influenced by shopkeepers An absolute monarchy ruled by its landed nobility and army A nation of shopkeepers
23. 23. What does Smith call the most usual way of disguising a public bankruptcy as a payment?

    Selling crown lands Borrowing from the sinking fund Converting the debt into life annuities Raising the denomination of the coin
24. 24. What does Smith give as the cause of the fall in the value of silver between about 1570 and 1640?

    The bounty on the exportation of corn The exhaustion of the mines worked since Roman times The debasement of the English coin under Henry VIII The discovery of the abundant mines of America
25. 25. How does Smith describe Britain’s American empire in the closing paragraph of the book?

    As the project of an empire, not an empire As a province that paid far more in taxes than it ever cost Britain to defend As a model of good government for the rest of Europe As the chief source of the nation’s gold and silver
26. 26. What does Smith say the great proprietors exchanged their power and authority for?

    Shares in the great trading companies of London Luxuries such as “a pair of diamond buckles” Protection from the burghers’ militias Royal titles and offices at court
27. 27. What did Britain grant Portugal under the Methuen Treaty of 1703, as Smith reads it?

    British merchants would buy all of Portugal’s Brazilian gold Portuguese woollens would enter Britain duty free Portuguese wines would pay a third less duty than French wines Portuguese wines would enter Britain free of all duty for ever
28. 28. How does Smith describe the carrying trade in Book II, chapter 5?

    As the employment of capital that adds most to a country’s annual produce As a trade that must always be carried on in the merchant’s own ships As the trade statesmen are right to favour with special encouragement As the natural effect and symptom of great national wealth, not its cause
29. 29. What does Smith call “the real measure of the exchangeable value of all commodities”?

    Labour Landed property The price of corn Gold and silver
30. 30. According to Smith, how could a villein escaping his lord become free?

    By hiding from his lord in a town for a year By enlisting in the king’s army for a campaign By paying the taille for three years By buying his freedom from the Church
31. 31. According to the introduction to Book II, what must come before the division of labour?

    The accumulation of stock The improvement of land The extension of the market abroad The invention of money
32. 32. How, according to Smith, did the British sinking fund first arise?

    From the treasure accumulated by Queen Anne From a special tax on land voted for the purpose From the profits paid to the state by the South Sea Company From the surplus left when interest on the funded debt was reduced
33. 33. In Smith’s “early and rude state”, if killing a beaver usually costs twice the labour of killing a deer, what does one beaver exchange for?

    Half a deer One deer Two deer Whatever the hunter’s landlord demands
34. 34. Which of these does Smith not class as unproductive labourers?

    Churchmen, lawyers and opera-singers The officers and men of the army and navy A master manufacturer’s workmen The sovereign and the officers of justice
35. 35. What does Smith blame for the 'sudden and unaccountable differences’ in wages between neighbouring places in England?

    The high duties on foreign manufactures, which favour some districts over others The scholarships that crowd the learned professions in some places and not in others The assize of bread, which fixes the price of food differently in each town and county The law of settlements, which hinders a poor man from moving to another parish
36. 36. According to Smith, what was the sole motive of the council of Castile in taking possession of the lands Columbus had found?

    The hope of finding treasures of gold A new route for the spice trade with India The conversion of the inhabitants to Christianity Land for Spain’s surplus population
37. 37. What is Smith’s objection to the herring-buss bounty being a tonnage bounty?

    It was paid only to the boat fishery of the sea-lochs and the western isles It was paid only to vessels built in Holland It followed the ship’s burden, not its catch, so vessels fitted out to catch the bounty It drove the home price of herrings so low that the poorer fishers were ruined
38. 38. In Smith’s pin factory, how many pins could the ten workers make among them in a day?

    Over 48,000 About 12,000 Fewer than 2,400 in all Only about 4,800
39. 39. Which four qualities do Smith’s maxims of taxation require of a tax?

    Proportionality, consent, permanence and economy Equality, progressivity, simplicity and neutrality Equality, certainty, convenience and economy Certainty, moderation, uniformity and publicity
40. 40. What does Mun compare the exportation of gold and silver to buy foreign goods to?

    A shepherd driving his flock to a distant market A husbandman casting good corn into the ground at seed time A fisherman casting his nets into the sea A banker lending at interest to a foreign prince in time of war
41. 41. What does Smith conclude about militias and standing armies?

    Firearms have made the two forms equal A militia is superior in modern war, a standing army only in ancient war A citizen militia is always superior, because it fights for its own homes A well regulated standing army is superior to any militia
42. 42. In the chapter added in 1784, what does Smith call “the sole end and purpose of all production”?

    Consumption The accumulation of capital The employment of the people A favourable balance of trade
43. 43. In what situation does Smith think the zeal of religious teachers would be ‘altogether innocent’?

    When two or three great sects share power under the civil magistrate When there are hundreds of small sects, none favoured by law When one established church is paid fixed salaries by the state When the pope appoints all bishops and abbots
44. 44. According to Smith, from what do we expect our dinner?

    Their benevolence and humanity The regulations of the civil magistrate Their regard to their own interest The charity of well-disposed people
45. 45. If ordinary wages are ten shillings a week and a tax of one-fifth is laid on wages, what does Smith say wages must soon rise to?

    Fifteen shillings Twelve shillings and sixpence Twelve shillings Ten shillings, with the labourer bearing the tax
46. 46. In his digression on the corn trade, what does Smith say is the only cause of famine, as distinct from a dearth?

    Government trying, by improper means, to remedy a dearth Combinations among inland corn dealers to hoard it A run of unfavourable seasons The waste of war
47. 47. How does Smith propose that the public should help the common people acquire reading, writing and arithmetic?

    Free universities in every county, wholly funded by the state from taxes Compulsory apprenticeship to a schoolmaster for seven years Endowed colleges whose teachers are forbidden to take fees A little school in every parish, its master partly paid by the public
48. 48. Which group did the French agricultural system (the Physiocrats) call the “barren or unproductive class”?

    Farmers and country labourers The proprietors of land Soldiers, sailors and officers of the state Artificers, manufacturers and merchants