Week 1: Economic Schools of Thought: CC Econ #14 (glossary)

Classical Economics

A school of thought emphasizing free markets, private property, and limited government intervention, rooted in the ideas of Adam Smith and later developed by economists like David Ricardo and Alfred Marshall.

Comparative Advantage

The principle that countries or individuals should specialize in producing goods they can make most efficiently, and trade for others, leading to mutual gains.

Keynesian Economics

A theory developed by John Maynard Keynes that advocates for government intervention through fiscal and monetary policy to manage economic cycles, especially recessions.

Fiscal Policy

Government strategies involving changes in taxation and public spending to influence economic conditions.

Monetary Policy

Central bank actions that manage the money supply and interest rates to stabilize the economy.

Stagflation

A situation characterized by slow economic growth (stagnation) combined with high inflation, challenging traditional economic policies.

Austrian School

A school of thought opposing government intervention, emphasizing the limits of policy effectiveness and the importance of free markets, associated with economists like Friedrich Hayek.

Chicago School

An economic perspective, led by Milton Friedman, emphasizing the role of free markets, minimal government intervention, and a focus on controlling the money supply (monetarism).

Supply-Side Economics

A theory advocating tax cuts and deregulation to stimulate production, investment, and economic growth.

Socialism

An ideology favoring government involvement in the economy, including ownership of key industries and the provision of public goods like healthcare, while allowing some market activity.