Commerce; Economics; Market Competition

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AP European History › Commerce; Economics; Market Competition

Questions 1 - 10
1

Rampant inflation in Europe in the sixteenth and early seventeenth centuries was caused by __________.

an increase in the supply of money, while production remained the same

a decrease in the supply of money, while production remained the same

an increase in the supply of money and the level of production

a decrease in the supply of money and the level of production

an increase in the supply of money, and a decrease in the level of production

Explanation

Inflation generally occurs when there is too much money flooded into a society without a proportional increase in the level of production. In sixteenth-century Europe, almost all currency was backed by gold, silver, or some other precious metal, so when gold and silver flooded into Europe from the New World, it led to rampant inflation until the money could be reinvested into increasing the level of production.

2

Thomas Malthus’ Essay on the Principle of Population suggests that __________.

All of the other answers are correct

Human reproduction operates on an exponential level

The government should intervene to keep the population of the poor in check

As the population increases the standard of living for the population will decrease

Explanation

Thomas Malthus wrote his famous work An Essay on the Principle of Population in 1798, and it quickly came to have a profound effect on the government policies of Western European countries and the development of several ideas, such as the theory of natural selection. It states that population will naturally increase at a greater rate than the ability of that population to sustain itself—essentially, that unchecked population growth will lead to poverty and a lower standard of living. Malthus based his theory, in part, on his belief that human reproduction operates on an exponential model whereas production operates on an arithmetic model. The British government in particular during the Industrial Revolution took Malthusian theories to heart and attempted to limit the growth of the working class.

3

The banking revolution emerged first in __________.

The Netherlands

Great Britain

France

Germany

Sweden

Explanation

Banking, as we generally understand it, can be loosely traced to the Italian city-states at the height of the Italian Renaissance; however, it did not really emerge as an institution that could extend credit and support corporations until the banking revolution that began in the Dutch Republic in the seventeenth and eighteenth centuries and quickly spread to Britain and then around Western Europe.

4

The Wealth of Nations was written by __________.

Adam Smith

David Ricardo

Thomas Malthus

Thomas Hobbes

John Locke

Explanation

Adam Smith is one of the most influential economists in European history. His magnum opus The Wealth of Nations was published in 1776 and is one of the earliest-known works advocating for free-market laissez-faire capitalism. It also touches on issues like division of labor, class structure, and government intervention in the economy.

5

Britain embraced free market trade when __________.

their control over the seas and global commerce made doing so advantageous

the age of European exploration began

the Industrial Revolution had already spread to the United States and many other countries in Western Europe

they needed ideological support for the First World War

they were forced to do so by the United States

Explanation

Britain, like most other countries at the time, embraced mercantalism in the initial period of European colonialism and expansion; however, the British switched their economic policy to the promotion of free market capitalism once their naval power and commercial might made doing so advantageous. This has been widely criticized by politicians and thinkers in other countries who decry Britain’s emphasis on “fairness” and “economic equality” when, from their perspective, the British only embraced it themselves after they had become wealthy from the exploitation of other countries' raw resources and peoples.

6

In the mercantilist system, the primary purpose of overseas colonies is to __________.

provide the metropole with raw resources

provide a market for the sale of manufactured goods

provide workers to fuel production

establish posts to protect the transportation of goods

provide a distant area to which criminals could be sent

Explanation

The mercantilist system drove the first wave of European exploration and colonization from the fifteenth to the eighteenth centuries. It depended upon overseas colonies for raw resources which were then shipped to the metropole (home country) to be turned into manufactured goods. These manufactured goods, the theory goes, would then be sold around Europe, allowing the metropole to develop a favorable balance of trade. Over time, many of the colonies began to provide a market for the sale of manufactured goods or provided workers to fuel the system, but the primary purpose for establishing overseas colonies in the mercantilist system was almost always to provide the home country with much-needed raw resources.

7

The Medici family gained political control over the city of Florence in the later Middle Ages through __________.

their wealth and influence from the establishment of the most powerful bank in the Italian peninsula

religious influence from a significant number of family members becoming priests

a series of military victories thanks to the family's personal army

their role as advisors to a long line of Holy Roman Emperors

personally holding great tracts of land and resources in the Italian countryside

Explanation

In 1394, Giovanni de Medici founded the Medici Bank in Florence, which over the next century became the most powerful and influential bank in all of Europe. Through this influence, the Medici family slowly gained political power over the city of Florence, which was asserting itself as the most powerful Italian city-state. The Medici family would become hereditary Dukes of Florence, produce four popes, and have two women become queen regents of France.

8

The Iron Law of Wages states that __________.

In the long term, the amount paid to a worker will always tend towards the minimum needed to keep the worker alive and working.

In the long term, the real value of wages will steadily rise to reflect the growing demands of the working class.

Wages will never improve unless the middle and upper classes are motivated to do so by the threat of revolution.

Wages cannot improve unless the working class takes it upon itself to collectively work for better pay and favorable government policies.

The working class can only effect improvements to real wages through the electoral process of democracy.

Explanation

The Iron Law of Wages is an important principle of capitalist economics usually credited to David Ricardo, although sometimes it is credited to Thomas Malthus. It states that in the long term, the amount of money that a worker receives for labor will always tend towards the bare minimum needed to keep the worker alive and working.

9

What was a key reason for Romes invasion of Britain in 43 CE?

Minerals

Livestock

Slaves

Land

Timber

Explanation

Minerals, particularly tin and lead which are key in the manufacturing of silver, was Rome's primary interest. Although cattle was aplenty in Britain and the Romans certainly took what they wanted, that was not their goal. The Romans main goal was the expansion of their empire and the acquisition of valuable minerals to continue to fund their expansion, i.e. pay their armies.

10

A "bourse" refers to __________.

a stock exchange in the French-speaking world

a charter granted by the monarch of France that allows for the establishment of a trading monopoly

an investor in a joint-stock company in French, German, or Dutch

a common banking practice in the Netherlands in the eighteenth century

an economic cooperation agreement signed between the various states of Germany in the nineteenth century

Explanation

A "bourse" was the name commonly given to a stock exchange in the French speaking world, particularly in the Early Modern period.

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