Quiz: The Wealth of Nations

14 questions drawn at random. Score 80% for a silver medal.

1. 1. How, according to Smith, does rent enter into the price of commodities differently from wages and profit?

   Wages and profit are causes of high or low price; rent is its effect Rent determines price, while wages and profit are its effects Rent enters the price only of manufactured goods Rent is always exactly a third of the price of every commodity sold
2. 2. Which of these does Smith not class as unproductive labourers?

   A master manufacturer’s workmen The sovereign and the officers of justice Churchmen, lawyers and opera-singers The officers and men of the army and navy
3. 3. 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
4. 4. 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 real bills, paid when they fall due Advancing capital for land improvement on good security Discounting circulating bills drawn and redrawn between Edinburgh and London
5. 5. What does Smith give as the cause of the fall in the value of silver between about 1570 and 1640?

   The debasement of the English coin under Henry VIII The bounty on the exportation of corn The discovery of the abundant mines of America The exhaustion of the mines worked since Roman times
6. 6. How does Smith propose that the public should help the common people acquire reading, writing and arithmetic?

   Endowed colleges whose teachers are forbidden to take fees A little school in every parish, its master partly paid by the public Compulsory apprenticeship to a schoolmaster for seven years Free universities in every county, wholly funded by the state from taxes
7. 7. Why does Smith call the Navigation Act “perhaps, the wisest of all the commercial regulations of England”?

   Because it raised the most revenue for the customs Because it made British goods cheaper in foreign markets Because it ended England’s wars with Holland Because defence matters more than opulence
8. 8. Which of these is not one of Smith’s reasons why masters usually win wage disputes?

   Masters can live a year or two on their stock, while workmen could not last a week or a month The law prohibits workers’ combinations but not masters’ Masters are fewer and can combine more easily Workmen are forbidden by law to change their trade
9. 9. In his digression on the corn trade, what does Smith say is the only cause of famine, as distinct from a dearth?

   The waste of war A run of unfavourable seasons Combinations among inland corn dealers to hoard it Government trying, by improper means, to remedy a dearth
10. 10. Founding a great empire to raise up a people of customers is, Smith says, a project extremely fit for what?

    An absolute monarchy ruled by its landed nobility and army A republic of yeoman farmers with plenty of cheap, good land A nation of shopkeepers A nation whose government is influenced by shopkeepers
11. 11. Which pair does Smith use to show that value in use and value in exchange can diverge?

    Iron and gold plate Corn and silver plate Water and diamonds Bread and French wines
12. 12. 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 Interest is not a neat produce but a compensation for the risk and trouble of employing stock Taxing interest would immediately raise the rate of interest in proportion to the tax Capital is hidden and fluctuating, and can be moved abroad while land cannot
13. 13. How does Smith compare the rent of coal mines with the rent of an estate above ground?

    Coal mines and land pay about the same share, and sell at the same number of years’ purchase Coal mines pay a fixed money rent every year, while the rent of land varies with each year’s crop A mine commonly pays a tenth of its produce, land a third; mines sell at fewer years’ purchase Coal mines commonly pay half their gross produce in rent, and sell for more years’ purchase than land
14. 14. How does Smith distinguish fixed capital from circulating capital?

    Fixed capital yields profit without changing masters; circulating only by changing hands 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 is lent out at interest; circulating capital is employed by its owner himself