Ch 2 - Evolution of Economic Thinking

Monetarism

________: a school of thought in monetary economics that emphasises the role of government in controlling the amount of money in circulation.

Neoclassical

________: focuses on how individuals operate within an economy.

Behavioural Economics

________: Neo- classical approach that consumers behave rationally.

total national income

Demand, and not supply, determined the ________ of a country.

Government spending

________ is necessary to maintain employment.

national output

Variation in the money supply has a major influence on ________ in the short run and price levels on the long term.

Neoclassical thinking

________: a broad theory that focuses on supply and demand as driving forces behind the production, pricing, and consumption of goods and services.

Classical economics

________: an idea that markets work best when theyre left alone and that government plays a very small rate.

**Nudge Theory**

theory that consumers can be ‘nudged’ to make decisions voluntarily that are better for them and for society.

Keynesian Economics

Government spending on infrastructure and unemployment benefits and education will increase consumer demand

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Keynesian Theories

In order to increase demand, more money should be spent and taxes should be lowered

Alfred Marshall

the exchange of goods and services as the key factors of economic analysis

Karl Marx

founder of communism, believed that there will be an inevitable breakdown in the capitalist free trade system

Neoclassical thinking

a broad theory that focuses on supply and demand as driving forces behind the production, pricing, and consumption of goods and services

Classical thinking theory

states that the value of a product is determined by the cost of production

Neoclassical economic theory

  states that the value of a product or service is determined by how the consumer perceives said product

Monetarism

a school of thought in monetary economics that emphasises the role of government in controlling the amount of money in circulation

Behavioural Economics

Neo-classical approach that consumers behave rationally

Nudge Theory

theory that consumers can be ‘nudged to make decisions voluntarily that are better for them and for society