The History Of Economics

Economics Flashcards

Mercantilism

Wealth of a nation is measured by its stock of gold and sliver. (trade surplus)

Invisible hand

Individuals acting in their own self-interest unintentionally contribute to the public good

comparative advantage

How trade benefits both parties even if one is more efficient in producing everything

John Stuart Mill

Social welfare (maximize overall happiness), government intervention is necessary, liberty and individual freedoms

Marginal Utility

As you consume more of a good, the additional satisfaction from each unit decreases

Aggregate Demand

Total demands for goods and services in the economy

Fiscal Policy

Government spending and taxation can be used to stimulate or slow down the economy.

Recession

Government action is necessary to stabilize the economy.

Behavioral Economics

People don't always make rational decisions due to psychological biases and emotions.

Classical Economics

Free markets can regulate themselves. There is an equal distribution of weath.

Austrian Economics

Private ownership of property, and limited government. Too much of an item is bad (marginal utility), unlike classical too much of something is dissatisfactory. Inferior goods don't get made in plentiful because of the labor.

Keynesian Economics

Encourages government action to increase or decrease demand and output

Colonialism

means of acquiring wealth

Labor theory of value

the value of goods is based on the labor used to produce them

The quantity of money theory

The money supply effects inflation and output (reduce government intervention)