Macro Test 1 Part 2

HE EARLY 18th CENTURY: THE BIRTH OF
CAPITALISM AND ECONOMICS
- The Industrial Revolution
- Labor Movement From Home and Farm to
Large-Scale Factories in Cities
- Cost Savings and Gains from Exchange
Result: Greatly Improved Standards of Living
- Adam Smith’s “Invisible Hand” Begins to Work
- What? How? and For Whom Determined by the
Owners of “Capital”

III. MID 19th TO LATE 20th CENTURY: THE RISE
AND FALL OF SOCIALISM
-Marxian Theory of: The “Exploitation” of
Labor by the “Capitalists”, Spreads
- Soviet Union and 1/3 of World Population
Turn to Communism
- “Central Planning” Determines What, How,
and For Whom
Result: Standards of Living Fall and Communist
Economic Systems Collapse Throughout the World

IV. 1929 THROUGH THE 1930’S: THE GREAT
DEPRESSION
- Stock Market Crashes, 1000s of Banks
Fail, Unemployment Soars to 25%
- Capitalism on Trial
- Keynesian Economic Theory and the
Birth of Macroeconomics
Result: The World Learns that Capitalism Can Stall
and Governments May be Needed to Kick-Start

V. OUR MODERN ECONOMY
Greatly Affected By:
(1) Technological Progress:
- Transportation
- Communication
(2) Reduced Trade Barriers
Result: An Explosion of Trade and
the Globalization of Our Economy

Our Global Economy

I. For Centuries, Before the Birth of Capitalism
- Tradition/Custom and Authoritarian Rule
II. Early 18th Century: Capitalism and Economics Are Born
- Industrial Revolution, Free Markets, and Adam Smith
III. Mid 19th to Late 20th Century: The Rise and Fall of Socialism
- Marx, Central Planning, and Economic Failure
IV. 1929 Through the 1930’s: The Great Depression
- Stalled Capitalism, Keynes, and Macroeconomics
V. Our Modern Economy
- Technological Revolution and Globalization
SUMMARY: AN OVERVIEW OF MAJOR HISTORICAL