Questions what is the main features of the socialist economy?

Illustrate your understandings about Ricardo`s Stationary State notion

Key words: accumulation and investment of capital, falling profit rates, rent.
Answer: The core of Ricardo’s theory exists in capital accumulation. While Malthus directly contrasts food with population, Ricardo incorporates food and population into the dynamics of capital accumulation. In Ricardo’s theory, the land representing nature is the key, that restricts the economy in capital accumulation. Technical advances cannot overcome the diminishing returns in agriculture owing to the restrictions of nature. In section 1, we argue Ricardo’s theory of capital accumulation, comparing it with the theories of Malthus, J. S. Mill, and Smith. In section 2, we discuss the inverse relationship between wages and profit in the accumulation process, since profits fund capital accumulation. We examine how falling prices of manufactured goods and rising prices of food affect wages and profit

49. 
    David Hume and The specie-flow mechanism
    

Key words: domestic prices, gold inflow, adjustment mechanism
Answer: The price–specie flow mechanism is a model developed by Scottish economist David Hume (1711–1776) to illustrate how trade imbalances can self-correct and adjust under the gold standard. Hume expounded his argument in Of the Balance of Trade, which he wrote to counter the Mercantilist idea that a nation should strive for a positive balance of trade (i.e., greater exports than imports). In short, the "increase in domestic prices due to the gold inflow would discourage exports and encourage imports, thus automatically limiting the amount by which exports would exceed imports".

50. 
    Labor theory of value
    

Key words: relative value of a good, capital accumulation, long run price
Answer: The labor theory of value (LTV) was an early attempt by economists to explain why goods were exchanged for certain relative prices on the market. It suggested that the value of a commodity was determined by and could be measured objectively by the average number of labor hours necessary to produce it. In the labor theory of value, the amount of labor that goes into producing an economic good is the source of that good's value. The best-known advocates of the labor theory were Adam Smith, David Ricardo, and Karl Marx. Since the 19th century, the labor theory of value has fallen out of favor among most mainstream economists.

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