ECON 307

In Class Exercise Six - Turgot

1.  According to Turgot - interest is not paid based upon the assets that someone has, but instead based on what?  Relate this to Cantillon's entrepreneur.

2.  How was Turgot a forerunner to F. A. Hayeks' argument that the knowledge that markets need to operate is knowledge of "individual time and circumstances?"

3.  How did markets decrease fraud and assure quality, according to Turgot?  Why was government involvement in this a bad thing?

4.  Turgot lead the way to Menger's analsis of diminishing marginal utility (although he didn't quite get the marginal part down).  How was his analysis similar to Menger's -- and different from what most text books explain?

5.  What did Turgot add to Cantillon's entrepreneurial role?

6.  Turgot saw a big difference between Bob the entrepreneur borrowing money and the king borrowing money -- what was it?  How was time involved in the analysis?

7.  Turgot thought that there would not be a check on the king with respect to increasing the supply of paper money.  In fact, it would be the opposite.  What was his argument?  Government debt, especially, was seen as a reason for the king to increase the money supply.  Can you relate this to today?  What other reasons does government have to increase the supply of "fictitious" money?

8.  Do you have any other questions over this material?