Ppt on classical economics

Classical Theory of Income and Employment. Introduction to classical theory Classical economists : Adam smith, Ricardo, Edge Worth, Pareto, J.B Say and.

is a small possibility of full employment in a country. (b) Macro vs. Micro: (i) The classical economic theory dealt with individual aspects of the economy, and relates to microeconomics. (ii) Keynes’ theory relates to /macroeconomics which studies the economy as a whole. (c) Aggregates vs. Innumerable decisions: (i) The classical economic theory studies the economic system in terms of innumerable decision making units, for example, producers’ equilibrium and consumers’ equilibrium. (ii) Whereas/


Introduction Modeling new goods Kaldors stylized facts of economic growth The neo-classical model and the Solow residual Empirical pictures Endogenous.

Economy; Charles van Marrewijk Empirical pictures International Trade & the World Economy; Charles van Marrewijk Introduction Modeling new goods Kaldors stylized facts of economic growth The neo-classical model and the Solow residual Empirical pictures Endogenous growth An experiment in geographical economics Conclusions CHAPTER 16; NEW GOODS, GROWTH & DEVELOPMENT International Trade & the World Economy; Charles van Marrewijk Endogenous growth International Trade & the World Economy/


CHAPTER 13; ECONOMIC INTEGRATION

trade agreements ASEAN countries Regional trade agreements International Trade & the World Economy;  Charles van Marrewijk Regional trade agreements CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European/


18th June, 2007 Economics and Management Department at University in Białystok1 Redefinition of economic functions of contemporary state Ph.D. Renata Przygodzka.

as a ‘guardian’: - External defence, - Being on guard of private property and justice administration, - Maintenance of some public appliances. 18th June, 2007 Economics and Management Department at University in Białystok6 The most important views and theories of Classical School - Classical theory - sensu stricte (A. Smith, D. Ricardo, J.B. Say); - „Social liberalism” (J.S. Mill); - German school (F. List, A. Wagner); - Ordoliberalism/


History of Classical Liberalism

for intellectual and social progress Program of Studies-2.5: Examine the relationship between the principles of liberalism and the origins of classical liberal thought-2.6: Analyze the impacts of classical liberal thought on 19th century society Laissez-Faire Economics The coming of the Industrial Revolution changed Britain’s traditional economy from one of subsistence farming to factory work Britain’s development/


Chapter 10 End of Chapter 10 ECON 151 – PRINCIPLES OF MACROECONOMICS

interest rates, prices, and wages would always lead to full employment at real GDP of $12 trillion Figure 11-5 Effect of a Decrease in Aggregate Demand in the Classical Model Keynesian Economics and the Keynesian Short-Run Aggregate Supply Curve The classical economists’ world was one of fully utilized resources. In the 1930s, Europe and the United States entered a period of/


Chapter 11 Classical vs. Keynesian

would not fall. Prices would not fall. Self-regulation could not occur. The economy could get “stuck” with high unemployment. Classical Economics: In a recession, Wages will fall (more will be hired) Prices will fall (more will be bought) The economy self-/ the Great Depression seem to bear this out. In such circumstances, real GDP is demand driven. 36 Keynesian Economics was the answer to Classical economic theories and the suggested way to “jump-start” the economy again… pull out of the depression. Idea: /


Copyright © 2010 Pearson Addison-Wesley. All rights reserved. Chapter 11 Classical and Keynesian Macro Analyses.

Copyright © 2010 Pearson Addison-Wesley. All rights reserved. 11-2 Chapter Outline The Classical Model Keynesian Economics and the Keynesian Short-Run Aggregate Supply Curve Output Determination Using Aggregate Demand and Aggregate/-6 Effect of a Decrease in Aggregate Demand in the Classical Model Copyright © 2010 Pearson Addison-Wesley. All rights reserved. 11-14 Keynesian Economics and the Keynesian Short-Run Aggregate Supply Curve The classical economists’ world was one of fully utilized resources. In the/


ECONOMICS: Principles and Applications 3e HALL & LIEBERMAN © 2005 Thomson Business and Professional Publishing Slides by: John & Pamela Hall Economic Fluctuations.

potential output Because shifts in labor demand curve are not very large from year to year –Classical model cannot explain real-world economic fluctuations through shifts in labor demand 7 Figure 3: A Recession Caused By Declining Labor Demand? / boom and overheating economy even more 16 Where Do We Go From Here? Classical model is useful –Helps us understand economic growth over time How economic events and economic policies affect economy over long-run –But in trying to understand expansions and /


Classical & Keynesian Economics

demand, aggregate supply equals aggregate demand and there can be know general over production and general unemployment. CLASSICAL ECONOMICS: IMPLICATION OF SAY’S LAW There is automatic adjustment (built-in stability) when supply creates its own/General Theory of Employment, Interest and Money’ laid a frontal attack on the doctrine of classical economics. Keynes considered the fundamental classical assumptions of full-employment equilibrium condition as rare and unrealistic and phenomenon. According to him,/


Review of Macroeconomics

economic contraction and high unemployment that began in 1929 and continued throughout the 1930s. THE ROOTS OF MACROECONOMICS Classical Models Classical economists applied microeconomic models, or “market clearing” models, to economy-wide problems. Simple classical/ that occurs during recessions and depressions. Unemployment The Costs of Unemployment Social Consequences In addition to economic hardship, prolonged unemployment may also bring with it social and personal ills: anxiety, depression, deterioration/


The Classical Long-Run Model  Economists sometimes disagree with each other  Actually much more agreement exists among economists than there appears.

 Keynesian ideas became increasingly popular in universities and government agencies during 1940s and 1950s By mid-1960s, entire profession had been won over  Macroeconomics was Keynesian economics Classical model was removed from virtually all introductory economics textbooks  Classical model is still important In recent decades there has been an active counterrevolution against Keynes’s approach to understanding the macroeconomy Useful in understanding economy over/


Industrial Economics Does the U.K. Competition Commission use Austrian Economics?

profits MC (Monopoly) MC=S D Q1QM PM P1 A B C 0 Q £ MR Monopoly Increases Social Welfare = Monopoly = Perfectly Competitive Firm Neo-classical Economics Austrian Economics Industrial Economics Problems Natural Resources Abnormal profits Patents Mergers Barriers to entry Neo-classical Economics Austrian Economics Industrial Economics Problems Natural Resources Substitutes Abnormal profits Reward for success Patents Barriers to entry Mergers Ok Barriers to entry Consumer preference Neo/


“Master Ethnographic Texts” ~ “Classics” in the Anthropology of Europe and related studies.

Vasilika: A Village in Modern Greece. Belmont, CA: Thompson Wadsworth, 2002. (ISBN: 0030115450) Parmans classic picks Parmans classic picks -- Tony Galt “Classics" in the Anthropology of Europe two influential ethnographies of Greece are... Ernestine Friedl’s village study of Greece/ life toward explanations of how sociopolitical systems are transformed –and a focus on how to solve practical economic and political problems Susan Parman, Europe in the Anthropological Imagination, pp. 11 - 14Europe in the /


© 2002 Prentice Hall Business PublishingPrinciples of Economics, 6/eKarl Case, Ray Fair 14 Prepared by: Fernando Quijano and Yvonn Quijano The Labor Market,

persistent unemployment above the frictional and structural amount. © 2002 Prentice Hall Business PublishingPrinciples of Economics, 6/eKarl Case, Ray Fair The Classical View of the Labor Market The labor demand curve illustrates the amount of labor that firms/households want to supply at the particular wage rate. © 2002 Prentice Hall Business PublishingPrinciples of Economics, 6/eKarl Case, Ray Fair The Classical View of the Labor Market If labor demand decreases, the equilibrium wage will fall. Everyone /


Marx: Last of the Classicals

-capitalist, anti-feudal Theories used to promote capitalism against feudalism Main class-conflict of the time against feudal class, landlords By 1840, industrial capitalism dominant severe economic downturns A new class conflict: Capitalist vs Worker Classical economics turned against capitalism by... Karl Marx Marx German Philosopher/poet, trained in Hegelian “dialectics” Brilliant (but sometimes turgid) writer and thinker Radicalised as completed PhD Denied/


Exchange Rate Volatility and Keynesian Economics.

that money is neutral (money doesn’t affect output). This is equivalent to a vertical supply curve. Classical economics assumes that prices are flexible and that money is neutral (money doesn’t affect output). This is equivalent to a vertical supply curve. Classical vs. Keynesian Economics Classical economics assumes that prices are flexible and that money is neutral (money doesn’t affect output). This is equivalent/


Money, Output, and Prices Classical vs. Keynesians.

(a.k.a, the real economy) – independent of money supply (i.e., “money is neutral” ) Neoclassical Economics Classical economists assume that all prices are free to adjust to any new information and markets clear Therefore, output is completely determined /that the federal reserve increases the money supply by 10%. (Assume that V is constant) –Classical: Output remains constant, prices rise by 10%. Keynesian Economics Keynesian economists begin with the same money demand (MV = PY), but that money can /


Classical and Keynesian Economics

Equilibrium at varying price levels Disequilibrium and equilibrium Keynesian policy prescriptions 11-3 Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Part I: The Classical Economic System The centerpiece of classical economics is Say’s law Say’s law states, “Supply creates its own demand” This means that somehow, what we produce – supply – all gets sold 11-4 Copyright 2002 by/


Classical vs Keynesian Which one do you prefer?. CLASSICAL BELIEVES: Markets will behave according to S&D. In other words. S&D will respond accordingly.

output without raising prices. – Data showing the U.S. recovery from the Great Depression seem to bear this out. – In such circumstances, real GDP is demand driven. Keynesian Economics was the answer to Classical economic theories and the suggested way to “jump- start” the economy again… pull out of the depression. Idea: Government enters the economy. Stimulates the economy through Aggregate Demand. Fiscal/


SS 30-1 Program of Studies: 2.8-Analyze the evolution of modern liberalism as a response to classical liberalism.1.

of recession. Program of Studies: 2.8-Analyze the evolution of modern liberalism as a response to classical liberalism.3 Keynesian Economics continued …  Because the prices of everything rises too high during the inflation cycle, companies shut down/would cool down. Program of Studies: 2.8-Analyze the evolution of modern liberalism as a response to classical liberalism.6 Keynesian Economics continued …  As the economy cooled down the government could decrease interest rates, decrease taxes and increase/


Traditional Actors and Other Actors Lsn 7. Agenda Classical International System (1648- 1789) Transitional International System (1789- 1945) Post- World.

and expanded from a religious to a political character Ferdinand II, emperor of the Holy Roman Empire Classical International System (1648-1789) The war was the most destructive European conflict prior to the 20 th Century –Undisciplined soldiers committed acts of violence and brutality –Economic and social life was disrupted –One-third of the German population was killed In an effort to/


1 “Currency Board Systems and Hong Kong’s Evolving Arrangements” Professor Tsang Shu-ki Department of Economics Hong Kong Baptist University www.sktsang.com.

rate back to 7.80, i.e., equalising prices in the two sub- markets (the cash market and the deposit market). 17 III. Classical currency boards (7) In sum, there are three anchors for a classical currency board: (1) economic discipline because of the 100% foreign reserves requirement for the issuance of currency (so theoretically paper money cannot be increased without a balance/


SOCI0024 Modern Social Theory SOCI6008 Modern Theory and Sociological Analysis A Review and a Preview 1. Introduction: ‘classical’, ‘modern’, ‘theory’

as such, but by the effect of such inequalities on people’s moralities (norms of justice) Review and Preview Classical theories, cont’d  The classical theories as providing different and distinctive approaches to the economic, social and cultural aspects of modernity? Yes and No  The classical theories as proffering either optimistic or pessimistic views of the future of human society? Yes and No  The/


INTRODUCTION Keynesian economics (also called Keynesianism and Keyn esian theory) is a school of macroeconomic thought based on the ideas of 20th- century.

demand to attain potential output, calling this "underconsumption" (focusing on the demand side), rather than “overproduction" (which would focus on the supply side), and advocating economic interventionism.An intellectual precursor of Keynesian economics was underconsumption theory in classical economics, dating from such 19th-century economists as Thomas MalthusAttwood,and the American economists William Foster and Waddill Catchings, who were influential in the 1920s and/


Western Economic Theories and Schools Group Members: Jenny Kelly Etta Eutene.

of currency protective tariffs ( 保护关税 ) Development stages Representative --Thomas Monn 托马斯 · 孟 Output value of commodity must be larger than the input value to increase the currency input Background Viewpoint Representatives (2).Classical economics ( 古典经济学 ) (2). Classical economics Background  Workshop handicraft industry( 手工业 ) has gradually become the main form  The feudal system( 封建制度 ) has seriously hindered the capitalism about 1750-1875 Viewpoints “An invisible hand”—market( 看不见的手 ) Laissez-faire/


THE CLASSICAL MODEL How Classical is it? Gardner Ackley Macroeconomic Theory 1961.

was “a believer in the Governments ability to manage the economy through fiscal and monetary fine-tuning---a belief disputed by classical economic theorists….” From the NYT obituary, August 20, 1998 LABOR INPUT OUTPUT Production is the central focus of the classical model. Inputs in the forms of labor and capital are combined to produce output. K = K 0 THE PRODUCTION FUNCTION The/


1 © ©1999 South-Western College Publishing PowerPoint Slides prepared by Ken Long Principles of Economics by Fred M Gottheil.

would occur to return the economy to full employment 5 What is the main conclusion of Classical Economics? Because the economy is always tending toward a full employment equilibrium, there is no need for government intervention 6 What /.bls.gov http://www.westegg.com/inflation 68 What are the basic Schools of Economic Thought?What are the basic Schools of Economic Thought? What is Classical Economics? What is Keynesian Economics? According to the Keynesians, why do we have unemployment?According to the Keynesians,/


© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair Prepared by: Fernando & Yvonn Quijano 27 Chapter The Labor Market,

and employment in the economy. CHAPTER 27: The Labor Market, Unemployment, and Inflation © 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair 9 of 31 THE CLASSICAL VIEW OF THE LABOR MARKET THE UNEMPLOYMENT RATE AND THE CLASSICAL VIEW The unemployment rate is not necessarily an accurate indicator of whether the labor market is working properly. The measured unemployment/


New Classical Macroeconomics Intermediate Macroeconomics ECON-305 Spring 2013 Professor Dalton Boise State University.

wrong answers to the most basic questions of macroeconomic policy.” - Robert E. Lucas, Jr., “Tobin and Monetarism: A Review Article,” JEL (June 1981) New Classical Macroeconomics Evolved out of monetarist economics of 1970s Evolved out of monetarist economics of 1970s Major proponents Major proponents Robert E. Lucas, Jr. Robert E. Lucas, Jr. Thomas Sargent Thomas Sargent Robert Barro Robert Barro Edward Prescott Edward/


The Sociology of Karl Marx Part Two: Classical Social Theory Agenda Objective: 1. To understand the sociology of Karl Marx and its contributions to the.

to the field. The new field of sociology sought to understand the causes and effects of the dramatic economic, social, and political developments occurring during the Industrial Revolution. The writings of these sociologists form the basis of classical theory. What is Classical Social Theory? Classical social theory refers to the work of early sociologists who sought to understand the revolutionary change occurring in 19th/


Copyright © 2010 Pearson Addison-Wesley. All rights reserved. Chapter 11 Classical and Keynesian Macro Analyses.

often preceded recessions? Do recessions necessarily follow a run- up in the world price of oil? Copyright © 2010 Pearson Addison-Wesley. All rights reserved. 11-3 Chapter Outline The Classical Model Keynesian Economics and the Keynesian Short-Run Aggregate Supply Curve Output Determination Using Aggregate Demand and Aggregate Supply: Fixed versus Changing Price Levels in the Short Run Copyright © 2010 Pearson Addison/


The Political Spectrum Communism Communism Socialism Socialism Reform Liberalism Reform Liberalism Classical Liberalism Classical Liberalism Conservatism.

Nature: Human Nature: Inherently acts on self-interestInherently acts on self-interest and selfishness Dollarsign Bag  Classical Liberalism (cont’d) Economic Base: Economic Base: Industrialization to Capitalism to...Industrialization to Capitalism to... Economic Freedom:Very high Economic Freedom:Very high Economic Equality:Very Low Economic Equality:Very Low Freedom of Thought and Belief: Very High Freedom of Thought and Belief: Very High Freedom of Expression: Very High/


CHAPTER 11 Economic Growth Chapter 28 in Economics Michael Parkin ECONOMICS 5e.

weak. The relation is so weak that it can be said that the rate of population growth is virtually independent of the rate of economic growth. Slide 11-44 Copyright © 2000 Addison Wesley Longman, Inc. Growth Theory Classical Growth Theory Subsistence real wage rate - to explain the high rate of population growth The subsistence real wage rate is the minimum real wage/


Classical vs. Keynesian One more thing???? Which is best?

expenditures may occur. To learn more about John Maynard Keynes, click his photo above. John Maynard Keynes and the Great Depression Classical Economics: In a recession, Wages will fall (more will be hired) Prices will fall (more will be bought) The economy/from the Great Depression seem to bear this out. In such circumstances, real GDP is demand driven. Keynesian Economics was the answer to Classical economic theories and the suggested way to “jump-start” the economy again… pull out of the depression. Idea:/


1 1 MICRO ECONOMICS Chapter 1 Introduction to Economics.

26, 1842 (Bermondsey) London, England. Death: July 13, 1924 (Bermondsey) London, England. Wrote a book, entitled “Principle of economics” 2 The Neo-Classical view: Dr. Alfred Marshall (1842-1924), wrote a book in 1890 in Cambridge which was entitled “Principle of economics”. “He define economics as, economics is the study of mankind in the ordinary business of life, It examines that part of individual and/


ECONOMICS: Principles and Applications 3e HALL & LIEBERMAN © 2005 Thomson Business and Professional Publishing Slides by: John & Pamela Hall Economic Fluctuations.

shifts of labor supply curve are unlikely to occur, and –Because they could not accurately describe facts of economic cycle Classical model cannot explain fluctuations through shifts in supply of labor 10 Figure 4: A Recession Caused By Declining/ Labor Supply Labor Demand Real Wage Rate Employment 70 Million100 Million 11 Verdict: The Classical Model Cannot Explain Economic Fluctuations Earlier chapters stressed that classical model works well in explaining movements of economy in longer run –Does a rather /


Economic Growth CHAPTER 25 When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Define and calculate.

increase in real GDP per person will be temporary because prosperity will induce a population explosion. The population explosion will decrease real GDP per person. 25.3 THEORIES OF ECONOMIC GROWTH Classical Theory of Population Growth When the classical economists were developing their ideas about population growth, an unprecedented population explosion was under way. To explain the high rate of population growth, the/


Classical and Keynesian Economics Chapter 11 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

lead a market economy toward full employment growth with price stability on its own?  Or do we need active government policies during economic downturns?  We will examine two alternative answers: Classical Economics Keynesian Economics 11-4 Part I: The Classical Economic System  The centerpiece of classical economics is Say’s Law. Say’s Law states, “Supply creates its own demand.” This means that somehow, what we produce—supply/


Liberalism From Classical to Modern American. Absolute despotism once had to be accepted Before classical liberalism, the dominant idea was that God created.

French Revolution of 1789. Important thinker: Edmund Burke. In the U.S., conservative thought also blended with classical liberalism. In the U.S., conservative thought also blended with classical liberalism. Ideologies, continued In the 19 th century, socialism, communism and anarchism were responses to the economic distresses brought by industrial capitalism. In the 19 th century, socialism, communism and anarchism were responses to/


VIII. End of post-war miracle and of Bretton-Woods New Classical Economics New Keynesian Economics.

VIII. End of post-war miracle and of Bretton-Woods New Classical Economics New Keynesian Economics VIII.1 Neither Keynes, neither Friedman Keynes: general principles Keynesian belief in demand side/ wage and price rigidities (no market clearing) –Phillips curve: adaptive expectations hypothesis –New Classical Economics: market clearing, rational expectations, Lucas’ AS –End of 1980s – revival of Keynes: “The New Keynesian Economics” (NKE) Another view on the same problem … In the very long run: economy/


Economic Growth CHAPTER 25 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1Define and calculate.

increase in real GDP per person will be temporary because prosperity will induce a population explosion. The population explosion will decrease real GDP per person. 25.3 THEORIES OF ECONOMIC GROWTH Classical Theory of Population Growth When the classical economists were developing their ideas about population growth, an unprecedented population explosion was under way. To explain the high rate of population growth, the/


The Classical Background

for distribution of income Policy concern with removing barriers to growth created by unwise government legislation Major Components of Classical Economics Theory of exchange value based on labour time or cost of production. Water diamond paradox; use values not / Wage Fund Theory of Labour Demand Population theory of labour supply and the subsistence wage Major Components of Classical Economics Theory of Rent and diminishing returns in agriculture Ricardo’s corn model of falling rate of profit and eventual/


THEORIES AND CONCEPTS OF ORGANIZATION

organize for production, and that way can be found through systematic, scientific inquiry. Production is maximized through specialization and division of labor. People and organizations act in accordance with rational economic principles. Classical Theory (Covers the period from 1900s to mid-1930) Three assumptions: The relationship between employees and management: formal structured communication process, defined tasks, defined accountability, and formalized procedures and/


Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade.

Introduction International Trade & the World Economy;  Charles van Marrewijk David Ricardo (1772-1823) Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and gains / Charles van Marrewijk Autarky prod. and cons. along ppf (determines autarky price ratio) Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and/


Marxism and Critical Legal Studies

on which it rested. The base and the superstructure! The base is material or economic, all other social, cultural, political and legal phenomenon rested on that base. Marx uses the metaphor of foam floating (superstructure) on the sea (base). Classical Marxism Marx says that its not that the consciousness of human beings changes history rather that history changes the consciousness of human/


XV. New Classical Macroeconomics. XV.1 Introduction Before WWI: “classical” macroeconomics, market clearing, full employment and full employment product,

next period, households learn their mistake and will adjust → return to Y * anyway Do economic policies matter? New Classical Macroeconomics –Allows for short term fluctuations from natural values –Based on completely different theory than the/some short term fluctuations adjustment to natural values anyway Policy impotence proposition – PIP XV.7 Conclusions Critical assessment New Classical Economics - a “great leap forward”, but a lot of criticism Rational expectations: –Costs to obtain information –What /


The History of Economic Ideas: How Did We Get Here from There?

of Capitalism • The fundamental driving force in capitalist accumulation: The capitalist automatically saves his profits and thus induces economic growth • Economic growth encourages a “division of labor” creating increases in productivity which add to profits and to further capital accumulation/had not been an integral part of economic analysis The Smith-Ricardo “Classical” Analysis of Markets Price Price D S D D’ P* S’ P* S S’ D’ Quantity Quantity Q* Q* Classical Case 1: Quantity is Demand-Determined/


Economic Fluctuations:

of Adam Smith, David Ricardo, John Stuart Mill, etc. Keynesians are called so after economist John Maynard Keynes. Focus on short-run economic issues. Chapter 25: Short-Term Economic Fluctuations: An Introduction Chapter 25: Short-Term Economic Fluctuations: An Introduction Classical Economics The Classical approach was laissez-faire Markets are perfect if they are just left alone. The market is self-adjusting (Say’s Law), so/


Combined Chapters – Chapter 11 and 12

without raising prices. Data showing the U.S. recovery from the Great Depression seem to bear this out. In such circumstances, real GDP is demand driven. 24 Keynesian Economics was the answer to Classical economic theories and the suggested way to “jump-start” the economy again… pull out of the depression. Idea: Government enters the economy. Stimulates the economy through Aggregate Demand. Fiscal/


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