Important guys Flashcards
J.B. Say
Say’s Law of Markets. This theory, advocated in 1803 by the French economist J. B. Say, states that overproduction is impossible by its very nature. This is sometimes expressed as “supply creates its own demand.”
Gary Becker
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.
Was first to begin to study discrimination.
The elements of the theory of human capital are given in
Gary S. Becker, Human Capital: A Theoretical and Empirical
Analysis, with Special Reference to Education , 3rd ed. (University
of Chicago Press, 1993).
Carl Menger
founder of the Austrian school of economics. What made Menger (along with economists William Stanley Jevons and Léon Walras) a founder of the marginal utility revolution was the insight that goods are valuable because they serve various uses whose importance differs.
Francois Quesney
In his Tableau Quesnay developed the notion of economic equilibrium, a concept frequently used as a point of departure for subsequent economic analysis. Of explicit importance was his identification of capital as avances—that is, as a stock of wealth that had to be accumulated in advance of production. His classification of these avances distinguished between fixed and circulating capital.
As the originator of the term laissez-faire
Moreover, Quesnay’s work paved the way for classical economics—in particular for Adam Smith, who latched on to Physiocratic notions of free trade and the preeminence of the agricultural sector.
David Ricardo
David Ricardo was an 18th-century English economist renowned for his contributions to economic theory. He developed the comparative advantage theory, labor theory of value(OG), and the theory of rents, which have founded other schools of thought and form the basis of current economic policies and decisions
In his 1817 book On the Principles of Political Economy and Taxation, Ricardo developed the principle of comparative advantage as we know it today. He considered an example with two goods (wine and cloth) and two countries (England and Portugal). He showed that both countries could gain by opening trade and specializing.
Karl Marx
he wrote his massive critique of capitalism, Capital (1867, 1885, 1894). The centerpiece of Marx’s work is an incisive analysis of the strengths and weaknesses of capitalism. Marx argued that all commodity value is determined by labor content—both the direct labor and the indirect labor embodied in capital equipment.
Labor theory of value. The view,
often associated with Karl Marx,
that every commodity should be
valued solely according to the
quantity of labor required for its
production.
Marxism. The set of social, political,
and economic doctrines developed by Karl Marx in the nine
teenth century. As an economic
theory, Marxism predicted that
capitalism would collapse as a
result of its own internal contra
dictions, especially its tendency to
exploit the working classes.
Adam Smith
the founder of microeconomics ,
the branch of economics which today is concerned
with the behavior of individual entities such as markets, fi rms, and households. In The Wealth of Nations
(1776)
The Invisible Hand
Described specialization in the pin factory
Described what happens to the guild master whit regulations against trade.
More than two centuries ago, in The Wealth of Nations, Adam Smith posed the paradox of value: Nothing is more useful than water; but it will scarce purchase anything. A diamond, on the contrary, has
scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.
water’s price is determined by its marginal utility, by the usefulness of the last glass of water. Because there is so much water, the last glass sells for very little. Even though the first few drops are worth life itself, the last few are needed only for watering
the lawn or washing the car.
Early economists like Adam Smith and T. R. Malthus stressed the critical role of land in economic growth.
Founder of Classical Economics
John Maynard Keynes
The General Theory of Employment, Interest and Money , a landmark book that attempted
to explain short-run economic fluctuations in general and the Great
Depression in particular. Keynes’s main message was that recessions
and depressions can occur because of inadequate aggregate demand
for goods and services.
In the 1930s, the economist John Maynard Keynes suggested
that asset markets are driven by the “animal spirits” of investors irrational
waves of optimism and pessimism.
theory of liquidity preference Keynes’s theory that
the interest rate adjusts
to bring money supply
and money demand into
balance
Part of the Kennedy proposal was an investment tax credit that gave a tax break to firms that invested in new capital. Higher investment would not only stimulate aggregate demand
immediately but also increase the economy’s productive capacity over the long run.
Traditional Keynesian analysis indicates that increases in government purchases
are a more potent tool than decreases in taxes.
Keynes developed an analysis of what causes business cycles, with alternating spells of high unemployment and high inflation.
Economists often contrast classical unemployment with the unemployment that occurs in business cycles, often called Keynesian unemployment,
which results from insufficient aggregate demand.
One of the most important relationships in all macroeconomics is the consumption function. The consumption function shows the relationship between the level of consumption expenditures and the level of disposable personal income. This concept, introduced by Keynes, is based on the hypothesis that
there is a stable empirical relationship between consumption an income.
The simplest approach to understanding business cycles is known as the Keynesian multiplier model. It is a macroeconomic theory used to explain how output is
determined in the short run. The name “multiplier” comes from the finding that each dollar change
in exogenous expenditures (such as investment) leads to more than a dollar change (or a multiplied change) in GDP. The key assumptions underlying the multiplier model are that wages and prices are fixed and that there are unemployed resources in the economy.
“Keynesian cross,” because it shows how output equals expenditure when the expenditure curve crosses the 45° line. TE = C + I
the paradox of thrift, Keynes pointed out that when people attempt to save more, this will not necessarily result in more saving for the nation as a whole. Higher desired saving means lower desired consumption, or a downward shift in the consumption function.
Milton Friedman
Book Capitalism and Freedom
libertarian
Chicago School of Economics. A
group of economists (among
whom Henry Simons, F. A. von
Hayek, and Milton Friedman have
been the most prominent) who
believe that competitive markets
free of government intervention
will lead to the most efficient operation of the economy.
He is the founder of monetarism, an active monetary policy where governments control the amount of money in circulation.
