Iclicker Question Which of the following actions is the most mercantilist? A. The Provo City council requires more small businesses to get business licenses. B. The executive branch increases the financial assistance it gives to exporters. C. A judge rules that state colleges can use race- based preferences in admissions. D. Congress approves a trade agreement with Europe that removes tariffs on various imports.

iClicker Question Restricting imports and encouraging exports would strengthen the U.S. economy in the long run. A. I agree. B. I disagree. C. I don’t care. I’m British.

Iclicker Question How did Adam Smith define the wealth of a nation? A. The value of its total production. B. The amount by which its unemployment rate falls below 10%. C. The total value of its productive assets. D. The amount of its gold reserves.

Locke and Smith: Individual Sovereignty Sovereignty: Locke: the people have political sovereignty. Smith: consumers have economic sovereignty. Role of government: Locke: government should secure the rights of the people. Smith: government should allow the economy to maximize the economic well-being of each person.

Concept Check:, ,  Two archetypal economic systems Mercantilism Smith’s definition of national wealth Parallels between Smith and Locke Smith’s argument for why market system is best Exchange: definition; benefits. How exchange supports a Good Society Three prerequisites for exchange Money and exchange

Quiz 6 1. Restricting exchange harms society because doing so reduces wealth and limits liberty at the same time. 2. Money is one of the most important inventions in history because money facilitates exchange. 3. According to the text, the three main goals of our economic system are efficiency, equity, and freedom. 4. A market system promotes the ideals of the Declaration of Independence by making it easier for people to pursue happiness while enjoying liberty. 5. A totally efficient market is one in which it is possible to make someone better off without making anyone else worse off.

Iclicker Question Choose the statement that best applies to exchange: A. Exchange makes both parties better off, even though no one produces anything. B. Money facilitates exchange and creates a coincidence of wants. C. With exchange, even though neither party gets more real wealth, both feel better. D. Government reduces the amount of exchange in an economy.