Chapter 7 Flashcards
wrote “The Theory of Leisure Class”
Thorstein Veblen
coined the concept of conspicuous consumptions and conspicuous leisure
Thorstein Veblen
is the spending of money and acquiring of luxury goods and services to publicly display the economic power of the income or the accumulated wealth of buyer
Conspicuous Consumption
is employed when non-productivity can be more effectively demonstrated through lavishness
Conspicuous consumption
American Capitalism: The Concept of Countervailing Power.
John Kenneth Galbraith
was one of the most widely
read economists in the United States. One reason is that he wrote so well, with the ability to turn
a clever phrase that made those he argued against look foolish
John Kenneth Galbraith
in which he contrasted the affluence of the private sector with the squalor of the public sector
John Kenneth Galbraith - The Affluent Society
was an American economist known for his theories
on industrial monopolies and competition
Edward Hastings Chamberlain
a book thats purred discussion of competition, especially between firms whose consumers have preferences for particular products and firms that control the prices of their products without being monopolists
Theory of Monopolistic Competition by Edward Hastings Chamberlain
is the economist who coined the term product differentiation.
Edward Hastings Chamberlain
was arguably the only woman born before 1930 who can be considered a great economist
Joan Violet Robinson
Robinson’s first major book was ______________ In it she laid out a model of competition between firms, each of which had some monopoly power.
The Economics of Imperfect Competition.
was the first to define macroeconomics, which became
a separate field of inquiry only with Keynes’s book, as the_________________________
Joan Violet Robinson, “theory of output as a whole”
An English economist, whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.
John Maynard Keynes
he spearheaded a revolution in economic
thinking, challenging the ideas of neoclassical economics that held that free markets would, in the
short to medium term, automatically provide full employment, as long as workers were flexible in
their wage demands.
John Maynard Keynes
he advocated the use of fiscal and monetary policies to mitigate the adverse effects
of economic recessions and depressions.
Keynes
focuses on explaining why recessions and depressions occur and
offering a policy prescription for minimizing their effects.
Keynesian Economics
is not always automatically high enough to provide firms with an
incentive to hire enough workers to reach full employment.
Aggregate Demand (AD)
– income, employment, price at a normal, investment, consumption,
profit, demand for goods/services–they increase, but with low interest rates
Expansion (Recovery)
is an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured by a rise in real GDP.
Economic Expansion
income, employment, price at a normal, investment, consumption,
profit, demand for goods/services—they are at maximum
Peak (Prosperity)
is a business cycle contraction when there is a general decline in economic
activity. Generally occur when there is a widespread drop in spending.
Recession
- income, employment, price at a normal, investment, consumption,
profit, demand for goods/services—they are at the lowest level, stagflation
Depression (Trough)
was the twentieth century’s most prominent advocate of free markets.
Milton Friedman
Friedman established himself in 1945 with ___________
Income from Independent Professional
Practice, coauthored with Simon Kuznets
took on the Keynesian view that individuals and households adjust their expenditures on consumption to reflect their current income. He showed that, instead, people’s annual consumption is a function of their “permanent income,” a term he introduced as a measure of the average income people expect over a few years.
A Theory of the Consumption Function by Milton Friedman
stated that in the long run, increased monetary growth increases prices but has little or no effect on output. In the short run, he argued, increases in money supply growth cause
employment and output to increase, and decreases in money supply growth have the opposite
effect
Studies in the Quantity Theory of Money by Milton Friedman
Friedman’s solution to the problems of inflation and short-run fluctuations in employment
and real GNP was?
a so-called money-supply rule
If any twentieth-century economist was a Renaissance man, it was?
Friedrich hayek
Hayek was the best-known advocate of what is now called ?
Austrian Economics
One cause, he said, was increases in the money supply by the central bank. Such
increases, he argued in ______________, would drive down interest rates, making credit
artificially cheap.
Prices and Production, Friedrich Hayek
“Can CAPITALISM survive? No. I do not think it can.”
Joseph Schumpeter
he believed that capitalism would be destroyed by its successes, that it would
spawn a large intellectual class that made its living by attacking the very bourgeois system of
private property and freedom so necessary for the intellectual class’s existence
Joseph Schumpeter
It is also a sparkling DEFENSE of capitalism on the grounds that capitalism
sparks
ENTREPRENEURSHIP
____________ by the entrepreneur, argued Schumpeter, leads to gales of______________ as innovations cause old inventories, ideas, technologies, skills, and equipment to
become obsolete
Innovation, “CREATIVE
DESTRUCTION”
Schumpeter argued with the prevailing view that_______________ was the way to
maximize economic well-being.
“perfect” COMPETITION
argued with the prevailing view that “perfect” COMPETITION was the way to
maximize economic well-being. Under perfect competition all firms in an industry produce the
same good, sell it for the same price, and have access to the same technology
Joseph Schumpeter
He argued on this basis that some degree of ____________ is preferable to perfect
competition
Joseph Schumpeter, MONOPOLY
was also a giant in the history of economic thought. His magnum opus in the
area is History of Economic Analysis, edited by his third wife, Elizabeth Boody, and published
posthumously in 1954. In it Schumpeter made some controversial comments about other
economists, arguing that ADAM SMITH was unoriginal, ALFRED MARSHALL was confused,
and LEON WALRAS was the greatest economist of all time.
Joseph Schumpeter
was the quintessential empirical economist. Paging through his
classic microeconomics text The Theory of Price, one is struck by how many principles of
economics are illustrated with real data rather than hypothetical examples.
George Stigler
He’s more on Government Regulation. . Because of his research, economists view regulation much more skeptically than their counterparts of the 1950s did.
George Stigler
“The economic role of the state,” he
said, “has managed to hold the attention of scholars for over two centuries without arousing their curiosity.” He added, “Economists have refused either to leave the problem alone or to work on it.”
George Stigler
____________ is also a problem for firms when they collude, implicitly or explicitly, to set
prices. They do not know whether their competitors are secretly undercutting them. This uncertainty can be reduced, wrote Stigler, by spending resources to gather information. Stigler applied this insight to show that ______ is less likely to succeed if there are more firms in a market.
Information, Collusion
he received the 1992 Nobel Prize in economics for “having extended the
domain of economic theory to aspects of human behavior which had previously been dealt with—if at all—by other social science disciplines such as sociology, demography and criminology.”
Gary S. Becker
______unusually wide applications of economics started early. In 1955 he wrote his
doctoral dissertation at the University of Chicago on the economics of _________
Gary Becker’s, Discrimination
In the early 1960s Becker moved on to the fledgling area of ________
Human Capital
Applying the economist’s concept of __________, ________ showed that as market wages rose, the cost to married women of staying home would rise. They would want to work outside the home and economize on household tasks by buying more appliances and fast food.
Oppotunity Cost, Gary Becker
extended his insights on allocation of time within a family, using the
economic approach to explain the decisions to have children and to educate them, and the
decisions to marry and to divorce.
1970, Becker
