Chapter 2: The Economy Flashcards
1
Q
Adam Smith Wealth of Nations
A
division of labor necessary in pin factory to increase supply
2
Q
Adam Smith Invisible Hand
A
people are led by invisible hand to promote own interest
3
Q
Karl Marx views on economy
A
all value comes from labor
religion only gives worker hope
4
Q
John Maynard Keynes view on economy
A
national economy is self contained
government should intervene in economy to spur economic growth
5
Q
levers of economy (John Maynard Keynes)
A
interest rates
price levels
consumer demand
6
Q
Classical economic model
A
all producers/consumers are rational
there is perfect competition and information
7
Q
Rational economic man
A
maximizes utility and happiness
focused on self
8
Q
Collective irrationality
A
housing bubble pre 2008
irrationally investing money
