Macroeconomic Theories Of Macroeconomics And Classical...

Macroeconomic Theories Of Macroeconomics And Classical...
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and
decision–making of an economy as a whole, rather than individual markets. This includes national,
regional, and global economies. With microeconomics, macroeconomics is one of the two most
general fields in economics. There are two major macroeconomic theories that economists use to
describe the economy. Those theories are Keynesian and Classical. Each theory has a different
approach to the economic study of monetary policies, consumer behaviors, and government
spending. A few distinctions separate the two theories. Classical economics is the theory that free
markets will restore full employment without government intervention. They believe ... Show more
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That means that there is no need for fiscal policy designed for the purpose of restoring full
employment. A key assumption in the classical theory is that, with time to adjust, prices and wages
will decrease to ensure the economy operates at the full employment level.
Classical economists focus more on creating long term solutions for economic problems. Inflation,
government regulations and taxes can all play an important part in developing the classical theories.
Classical economists also analyze how current and new policies will impact the market
environment.
Keynesian economics is the view that in the short run, especially during recessions, economic output
is strongly influenced by aggregate demand. The theories forming the basis of Keynesian economics
were first presented by the British economist John Maynard Keynes. In the Keynesian view,
aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is
influenced by a host of factors and sometimes behaves erratically, affecting production,
employment, and inflation. Keynesian economics is the theory that the role of the federal
government is to increase or decrease aggregate demand to achieve economic goals. Keynesian
economics relies on the government to intervene and spend to help with economic growth during the
economic downturns. Keynesians believe that the economy is made up of consumer spending,
business
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Mercantilism: David Ricardo
David Ricardo
During the seventeenth and eighteenth centuries, mercantilism was at the forefront of economic
thought. This economic theory advocated a surplus of exports to increase the amount of money held
by a nation. Mercantilism also called for a large poor population, strict government regulations and
high tariffs on imported goods. These type of policies fueled anti–trade results and international
conflicts, catapulting thinkers like Adam Smith, Thomas Malthus and David Ricardo onto the
economic scene. These new, progressive and radical economists turned Europe 's traditional
mercantilist views upside down. Not only did these men recreate economics in their time, these
thinkers eternally changed the progression of economic thought far into the future. A new era was
created which shaped the path of American and European countries alike towards a more
progressive, trade–focused future.
Classical economics was developed during the eighteenth and nineteenth centuries by a primary
group of progressive economic thinkers including Adam Smith, Thomas Malthus, John Mill and
David Ricardo, among others. This period of economic thinking focused mainly on economic
growth through trade. Adam Smith, the noted Scottish economist famous for his "invisible hand"
theory, is widely accepted as the father of classical economists with his work The Wealth of Nations
written in 1776. This book emphasized the importance of trade instead of the previously highlighted
gold

The Impact Of Classical Economics On The United States
The United States has always faced its fair share of economic ups and downs. Financial upturns can
quickly lead to downswings, and there have been plenty of theorists who believe they can solve the
great divide. No one ever plans for a recession to last more than a few months, let alone watch the
economy crumble into a deep depression. How can this happen, when the economy is supposed to
be able to self–correct itself as one theory suggests? Moreover, when self–correction does not
triumph, does a new theory take effect to explain this conundrum? This week's readings have
introduced the concept of how classical economics have been taught since 1817, along with John
Maynard Keynes ideologies (Rittenberg & Tregarthen, 2012). To understand these two schools of
thought, it is important to look at what each one stands for individually. David Ricardo is one of the
founding fathers of what became known as classical economics. While technically all countries
already had their own economic system, Ricardo was the first to describe a macroeconomic theory
of how an economic society could remain stable for the then modern times. What David Ricardo
proposed was, as mentioned above, the economy will self–correct itself. How self– correction is
supposed to happen, is simply by not doing anything different at all. Businesses and workers
continue to compete against each other, while allowing free trade to come through from other
countries (creating more competition). During all

The Major Classical Theorists Influenced The Economics Of...
Three major classical theorists have attempted to interpret why societies change. They are Adam
Smith, Max Weber, and Karl Marx (Franks, 35). These three have inspired a lot of people down the
years. Adam Smith is known as the theoretical father of modern economics. In 1776, Smith argued
that the "invisible hand" of the market would change the economics of a nation and it would make
the nation better. In his invisible hand theory, he states that if one person strived to achieve success,
then the person would simultaneously benefit people around him. The prices and quality will be
determined by relationships between consumers and sellers through supply and demand (Franks,
34). In other words, the market will not be regulated by the ... Show more content on
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The history of Marxism is controversial, and the ideas have influenced a lot of men and women to
address social issues. Karl Marx stated that the occurrence of capitalism brought humanity a
necessary step closer to socialism and the conquest of human inequality (Frank, 30). This is an
inevitable part of the development of human society.
According to scholar Mario Barrera, traditional Marxists thinks that a class is a group of people who
have a similar relationship in things that they use in their daily lives, such as food, houses, and
appliances (Franks, 30). Also, Marxists address that each society has its own particular class
structure. In addition, Marxists have defined three primary classes that currently exist in a capitalist
social system, and they can be found in the United States. The first group of classes consists of
capitalists, people who own and control an enormous proportion of productive property in the
United States. Having productive property means being able to produce products, such as producing
products that people demand. In this case, capitalists are wealthy because they hold an
overwhelming amount of productive property.
The second group of classes consists of workers, people who have cars, computers. cell phones, and
homes, but they own little of productive property. The reason is that most of their income comes
from their wages, salaries, and tips. They do not own company themselves. The third group of
classes compose by the bourgeoisie, who

Compare And Contrast The Classical And Classical Economic...
The Keynesian and Classical economic models
The classical economic model was developed in the late 18th century and was popular before the
great depression. It states that the economics is very free flowing while wages and prices are freely
adjustable. The classical economic model assumes that the market is self– regulated and prices are
flexible for goods and wages. Adam Smith, father of modern economics, utilized the concept of
"self– interest" to simply explain this economic model. "In a market economy, individuals own most
of the resources available, labor, land and capital, and use voluntary decisions, made in self–interest,
to control the marketplace." (Investopedia) Jean Baptiste Say's rule stated "production is the source
of demand." (Investopedia) In other words, when people create a product or a service, they will get
paid for it and in turn will use that payment to demand other goods and services they desire.
The Keynesian economics model was developed by the British economist John Maynard during the
1930s in an effort to comprehend how the Great Depression occurred. Keynes economic model
discusses the total spending of the economy. The Keynesian model states that an economy can
operate below full capacity due to presence of market imperfections, therefore there would be needs
for expansionary fiscal policies or government intervention in regulating the market. Keynes
developed the theory of money illusion; a theory that states "that many people have an illusory

Compare And Contrast Adam Smith And Neo Classical Economics
5) CAPITAL
Adam Smith emphasized the importance of capital in the development of the nation's economy. He
recognized three forms of capital–
As an instrument of production.
As a fund maintaining the workmen.
As a source of revenue.
He classified capital into three portions–
i. Used for immediate consumption. (stock of food, clothing) ii. The fixed capital which receives
profit without being circulated. (machines, buildings) iii. The capital which receives revenue only by
being circulated. (money, materials) 6) ROLE OF MONEY–
According to Adam Smith, money is an instrument for measurement of value and for the circulation
of wealth. A true wealth of nation consists "not only in its gold and silver only, but in its lands,
houses, and ... Show more content on Helpwriting.net ...
As far as classical economy is concerned, the value of a good is equivalent to the cost required for
producing it. In the neoclassical perspective, the value of a good becomes a function of the demand
for it and the supply of it as it directly depends i.e. as the supply and demands changes the value will
also change. Therefore, in classical economics, value is treated as an inherent property which affects
situation of the market; in neoclassical economics." In classical economics, value is treated as cost;
in neoclassical economics, value is considered as a

The Neo Classical Model Of Economics
MONETARISM The 1930's saw the neo–classical model of economics, championed by Walras and
Mengers, crumble as rates of unemployment rose exponentially on a global scale. In the midst of
this economic crisis Keynes offered solution to the crisis in his 1936 'General theory of
Employment, Interests and Money'. He successfully argued that the state was alone capable of
steering the economy to produce 'social stability and social justice' (Valentine, 2003) Thus the post–
war consensus was formed and consequentially the centre ground of politics redefined,
Keynesianism socialist model would hold sway for the quarter century following World War II. The
decade of the 1970s was characterized by high and rising inflation and slow economic growth
(Jahan and Papageorgiou, 2014). Keynesianism couldn't answer the soaring inflation, Hayek, who
warned Keynesianism was a 'road to serfdom' (The Economist, 2013) and Friedman's 'neoliberal'
model could and Thatcher recognised this. The essential economic task of Thatcher was the
desertion of Keynesian 'macro–economics' (Valentine, 2013). The result was an adoption of
Monetarism, 'a belief in controlling the money supply as a means of controlling inflation' (Viven,
2003). The 1970's economy was corroded to the breaking point due to the clout of the unions.
Edward Heaths Conservative government was plagued by continuous strikes that led to the
declaration of the three–day working week. Inflation was rising as high as 24%, with one million

Classical Vs Keynesian Economics
Classical and Keynesian economics are both accepted schools of thought in economics, but each had
a different approach to defining economics. The Classical economic theory was developed by Adam
Smith while Keynesian theory was developed by John Maynard Keynes. Similarities: One of the
most surprising similarities between the two theories is that John Keynes developed his theory based
on the Adam Smith's theory. Keynes did not entirely disagree with Adam Smith but rather, expanded
the theory based on the Great Depression. They were both capitalists and agreed on the basic tenet
of capitalism– that a free market is more efficient in terms of allocating resources. Keynes, based on
the Great Depression, addressed issues related to repairing ... Show more content on Helpwriting.net
...
The Keynesian Economic theory relies on spending and aggregate demand to define the economic
marketplace. Keynesians believe that aggregate demand is often influenced but public and private
decisions. This theory stresses that unemployment is caused by the insufficient growth and low
growth of aggregate demand. Keynes urged that the economy can be below full capacity for a
considerable time without intervention and, hence, the market is not fully efficient as described by
the Adam Smith. 2. Aggregate supply and aggregate demand The classical view suggests that real
GDP is determined by supply side factors, that is the level of investment, capital, and productivity.
This suggests that, in the long–term, an increase in aggregate demand resulting from faster growth
in Long–run Aggregate Supply (LRAS) would cause inflation. Thus, the Long–run Aggregate
Supply (LRAS) curve is inelastic. The theory also suggests that, in the short term, the economy will
be able to reduce unemployment below the natural rate by increasing demand, but, in the long run,
the wages adjust, unemployment returns to its natural rate and, consequently, inflation ensues. There
is no trade–off in the long run. The Keynesian views the Long–run Aggregate Supply (LRAS)
differently, purporting that an economy can be below full capacity in the long–run. This theory, on
the other hand, places greater

Economics And Classical Liberal Economics
After World War II, Keynesian policies had dominated the economic system in most countries
around the world. However, this soon changed after the oil crisis in the 1970's and after government
intervention was blamed for stagflation, paving the way for the rise in neoliberal economics
dominated by Thatcherism and Reaganomics. The difference between neoliberal economics and
classical liberal economics is the rejection of Adam Smith's theory of the invisible hand of supply
and demand and believe it will worsen the economy. However, even though neoliberal economics
thrived during the 1980s and 1990's, the 2008 financial crisis has questioned whether limiting
government interventionism in the economy was one of the reasons why banks were allowed to act
recklessly (Economist, 2013), leading to the return of Keynesian economics in countries such as the
UK with the Labour Party electing Jeremy Corbyn as the leader. Critics such as Friedman argue
otherwise and point out the issues created by monetary and fiscal policy and an economy can only
thrive with freedom. This essay will evaluate whether the neoliberal theory against interventionism
helps the economy or does it lead to the downfall of the economy.
Neoliberal economics was highly influenced by the works of Milton Friedman. He believed that
economic freedom is when consumers have the freedom to buy and sell whatever they think best
meets their needs (Gintis, n.d.) and this is a "component of freedom properly understood"

Economics Essay
Economics is an ever–changing field of study. Within that area of interest, there are many people
who have influenced the world with their individual economic point of view. Some of those people
have made a fundamental impact upon not only the United States of America, but also upon the
world. Adam Smith, David Ricardo, John Maynard Keynes, Friedrich Von Hayek, Milton Friedman,
and Fengbo Zhang are six men who have accomplished just that. Their opinions, actions, and words
have forever changed the world of economics.
Adam Smith
The "father of economics" was born in Scotland. His birth occurred during the year of 1723. Adam
Smith's renowned book The Wealth of Nations examined the idea of capital and money, the progress
of industry, ... Show more content on Helpwriting.net ...
He felt that, except for certain extreme instances, the government should not interfere with the
market. Adam Smith died in 1790, but his economic ideas have lived on. Adam Smith and his
pioneering ideas and opinions are the basis on which economics has been built upon.
David Ricardo
David Ricardo was born in 1772 and was submerged into politics and government at a very young
age. After he finished his schooling, Ricardo's father placed him at the London Stock Exchange,
where David had a full time job at the early age of fourteen. In 1819, by the advice of James Mill, a
close friend, Ricardo joined the British Parliament. This opportunity, introduced Ricardo to the
world of economics.
He first became interested in economics due to Adam Smith's 1776 book The Wealth of Nations
when he was approximately twenty–seven years old. Thanks to his friend James Mill, Ricardo began
recording his own economic ideas onto paper. Following in Smith's footsteps, he was a classical
economist, having a very strong idea that markets can regulate themselves.
In 1815, Ricardo wrote the Low Price of Corn on the Profits of Stock Essay. In this Essay, David
Ricardo discussed his hypothesis that as a company hires more labor with a fixed amount of land
and capital, eventually there will be a point where hiring more workers will be less efficient. This is
theory later became known as the law of diminishing marginal returns. The law of diminishing
marginal returns can be

Involuntary Unemployment And Its Effects On The Economy
Contrary to what some economists believe, involuntary unemployment is a very real and continuous
presence in the economy, both past and present. In the United States, the unemployment rate
measures the number of people actively looking for a job as a percentage of the labour force.
According to the Bureau of Labor Statistics (BLS), the current unemployment rate is at 5.4 percent,
down from the high unemployment levels of a lingering 10 percent during the most recent recession
less than six years ago. This rate fails to include other failures in reaching full employment, such as
"the number of persons employed part time for economic reasons (sometimes referred to as
involuntary part–time workers) ... These individuals, who would have preferred full–time
employment, were working part time because their hours had been cut back or because they were
unable to find a full–time job" (Taborda, BLS). Involuntary unemployment is a common occurrence
in capitalism that happens when, rather than simply not choosing to work at the set wage, a person is
willing to work at the prevailing wage and yet remains unemployed. What many economists have
sought and continue to seek to find out is the cause of high unemployment levels, whether that be
what motivates humans to act in the economy or the nature of the system of capitalism.
Some modern economists praise our current economic system of capitalism and suggest that it is not
the cause of prolonged recessions while others condemn its

Important Aspects of a Free Market
Discuss some important aspects of the free enterprise system or capitalism.
Three essential principles of capitalism are: production is organized for the market, the means of
production are privately owned, and investment is privately controlled, and the people who use
those means of production to produce goods and services, that is workers, are hired on a labor
market to work in firms as employees. Capitalism is a form of market economy in which production
and investment are privately controlled, and the work of production is performed by employees,
hired from free labor markets. Capitalism is essential to the function of society due to the
opportunities that it creates and the augmentation of an individual's vitality. Individuals can ... Show
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One could say, this is libertarianism, where individual freedom is the paramount social value, where
freedom is determined by your own volition. Economics is simply incentivized behavior, the issue
with this is, when money becomes the incentive, does everything else go out the window? As we
saw in the Great Recession how the sub–prime loans fiasco rippled through our economy and
eventually the world. As we can see, there are positive and negative aspects of free enterprise, yet I
feel that hope and inspiration of the potential to be able to augment ones vitality is essential in
maintaining social order, keeping society efficient, and excelling forward. I want to be clear; I do
not view the United States as a free enterprise. I believe most aspect are, but when more than half of
the total output of the country is being distributed in a way that is determined by the government,
the term collectivizing or Keynesian economics is more appropriate. As Dr. Friedman states,
""Everybody knows that the way to develop and to improve the lot of people is through private
markets, free enterprise and small government. We're not practicing what we should be preaching.
I've been saying that the former communist states are trying as hard as they can to go where we were
50 years ago; whereas we're trying as hard as we can to go where they were 10 years ago."
References:
Watkins, James. Pros and Cons of Capitalism. Hubpages. Aug. 2010.

Economic Comparison Of Classical China And India
Economic Comparison of Classical China and India The early civilizations of China and India
emerged prior to 600 CE in what is known today as the continent of Asia. With the Himalayan
mountains in between them, these civilizations developed in isolation from one another, and yet still
managed to produce kingdoms with continuous growing populations to this day. Individual growth
and development amongst the people stimulated technological inventions, increased the chances of
survival and lead to: greater agricultural production, strong armies, and expansion. Eventually, these
commodities and other luxury items produced will be traded, spurring the economic growth of both
civilizations. Overall, these early stages of development not only furthered contact amongst these
two great empires allowing for cultural diffusion, but also set the foundation for future generations
to follow. Although China and India's growing empires took place in different parts of the world, the
structure of their economies developed similarly, beginning with an agricultural infrastructure and
progressing towards trade within and beyond the kingdoms, while also acquiring distinctive cultural
differences overtime such as a social hierarchy defined by certain beliefs. These characteristics will
define the beginning and the advancement of early economic systems used during the Foundations
Era and Classical Age, and provides insight on the essentials that influenced the two economic

The Theory Of Economic Growth
CHAPTER 2: LITERATURE REVIEW Abstract The theory of economic growth sparked a
revolution that has touched most societies across the globe. (Need to finish the abstract) 2.0
Introduction The aim of this original piece of research is to contribute to the overall understanding
of how financial development effects different sources of economic growth alongside the
effectiveness of fiscal policy. In highlighting this research direction, a strong literature review is
needed to indicate if any gaps exist. As the topic is well researched and broad, it is important to
streamline this research into a specific yet important fields to identify these gaps. This literature
review will therefore investigate into the following key areas: the history of economic growth,
modern growth theories: exogenous and endogenous, financial development growth and the
effectiveness of fiscal policy towards reducing economic uncertainty that ultimately affects growth.
2.1 The History of Economic Growth A considerable amount of theoretical and empirical literature
emerged during the nineteenth–century surrounding the theory of economic growth. If one is to
complete detailed research into how financial development affects different sources of economic
growth alongside the effectiveness of fiscal policy, a meaningful and well–structured literature
review must be presented. Due to the complicated nature of such a theory, a historical frame work
will be adopted to dilute its complicated nature. The

The Political Economy Of Communication
The political economy of communication is using political economy approach to analyse the media
and communication. Therefore, before discuss the political economy of communication we need to
figure out what is political economy and what is communication. The definition of political
economy is not simple. This essay uses the definitions given by Vincent Mosco and explores its
origin in Greek and inspiration from the Classical Political Economy. Apart from the Classical
Political Economy, this essay also describes other forms of this approach, such as Critical Political
Economy and Neoclassical Political Economy. Latter the characteristics of political economy study
are also discussed based on Vincent Mosco's work in the 1990s.
The part of communication starts by defining the concept of communication in a political–economic
way. To understand deeply the political economy of communication, it is necessary compare it with
culture studies, so this part also explains the similarities and differences between this two studies.
Finally the public television is used as an example to describe the peculiarities of the media and the
political economy of the media.
What is political economy?
At the beginning, the political economy has is origin in Greek. The word "economics" is composed
of "oikos" and "noms" which mean "house" and "law" (Mosco, 2009). Therefore, "economics" is the
management of the household (Mosco, 2009). "Political" has its origin of "polos" which means city–
state

Early 19th Century Adam Smith Gave Rise To The Classical...
Adrian Morales
Econ 51
Meric Keskinel
November 12,2017
The economy has been the long–term battle between different ideologies of how governments
should approach the monitoring of price and wage controls, of deficit spending, trade tariffs, and
subsidies. Developed around the early 19th century Adam Smith gave rise to the classical theory.
The classical model was used widely until the Great Depression. The classical view of economics
stated that government regulations of prices and of subsidies were not needed. Those who favored
the classical view believed that the economy was autonomous and that during periods of contraction
the economy would self–correct and stabilize. They argued that government should not meddle with
the economy, that free markets work and governments don't.
The classical approach focused on free trade with no protective tariffs, open markets, flexible wages,
increased production, and specialization. The classical approach was adopted by a majority of the
countries involved in world trade prior to the Great Depression. Classicists did not want government
interference stating that nations would benefit more from global trade in the production areas which
they had comparative advantages in in comparison with the protective measures the government
would place. Classical theory fought for open markets because they believed that supply caused
demand. Therefore increased production would stabilize the economy when consumption was lower
as corporations could

MGT 623 Week 1 Assignment Essay example
Tiffin University Problem Solution Analysis Paper Submitted for Course Number MGT 623 Legal
and Ethical Issues in Management Dr. Dave Ibarra By: Lauren M. Middleton October 26th, 2014
Milton Friedman advocates the classical theory of business, which essentially holds that businesses
should be solely devoted to increasing profits as long as they engage in open and free competition
devoid of fraud. Friedman was an advocate of free market forces, he would recommend that let the
market forces operate freely and the executive compensation will reach the right levels. The high
performing executives will command higher salaries and poor performing executives will receive
lower salaries or simply become unemployed. If ... Show more content on Helpwriting.net ...
A tenet of that theory is that enlightened egoists will recognize that socially responsible behavior
will benefit them. Both psychological egoism and the classical theory can be defended by the
utilitarian argument. Utilitarianism maintains that any action or system is good if it results in the
greatest good for the greatest number of people. A utilitarian would commence by looking at the
total utility or the happiness generated by the compensation paid to executives. Now if paying
executive compensation by way of stock options leads to misguiding skyrocketing of profits figures
and causes financial loss to several shareholders of the company, the utilitarian will propose that the
executives should not be compensated by way of stock options. Moral worth lies in contribution to
the overall utility. In summary, if, as Smith contended, self–interest is a chief motivator and the
invisible hand really works, then as companies seek to maximize profits, the greatest public good
will result for the greatest number. Critics of Smith's and Friedman's theories contend that they
neglect the need for cooperation and teamwork in society, and that chaos can be avoided only with
heavy policing of self–interested behavior. Proponents of the invisible hand counter that individuals
will usually pursue cooperation and self–regulation because it is in their own interest. A
deontological thinker would say that it is the duty of the

Classical Economics Uses The Value Theory
The world economy has been fluctuating drastically in the past decade and continues to change
every day. Endless debates on which economist's theory (Classical or Hayek, and Keynesian) is right
and whose is wrong regarding different aspects of the economy, such as government intervention,
how the economy is driven, and who is paying for stimulus packages in the short and long term, are
ongoing. Both Hayek and Keynesian have different ideas and ways of dealing with the economy and
both believe they are superior to one another. Classical economic theory is the concept of a laissez–
faire economic market. A laissez–faire economic market is most commonly known as "free market,"
(Econ Stories, 2010, Jan. 23). It requires little to no government control. It also gives individuals the
freedom to their own self–interests and wants. This guarantees that economic resources are targeted
to the individuals who want them and businesses in the marketplace. Classical economics uses the
value theory. The value theory encompasses a range of approaches to understanding how, why, and
to what degree the object holds value and how much it is desired by the individual or subject of
valuing is a person, idea, object, or anything else, to determine prices in the economic market and
how to manipulate them. The value of an item is determined based on that item's individual
production output, technology and wages paid to produce the item. (Vitez, O., January 2016).
Keynesian economic theory

Distinguish Between Classical Political Economy And...
1. Distinguish between Classical Political Economy and Neo–Classical Economics.
ANS; A classical political economy is a branch of social sciences which deals with the studies of
relationships between individuals and society and between markets and the governing state, using a
different tools and methods from various discipline of social sciences like economics,political
science, and sociology. The term political economy is emerge from the greek word polic, i.e "city"
or "state," and oikikonomo, meaning "one who take care or able to manage a household or estate."
Political economy can be understood by the study of relationship between how a country public's
household is managed or governed in order to establish the relation between political relation and
economy.
Adam ... Show more content on Helpwriting.net ...
Theory of rent prevailing an importance to the rent.
Ricardo mainly emphasize on the substaintial wages. Ricardo developed this theory, adam smith
firstly propose this theory. The rent of land can be increase by increase in the productivity of land,
simultaneously decline in the profits, through which he had dispute with the "Corn Laws" which
was in the favour in rder to protect the landlords from importing tarriff on them.
According to ricardo "Rent is reward to the people to use this land for the production activity and
get benefits from the land. In other words the rent is the portion of the earth that has to be given to
landlord for using the original and industructibul (well fertile) power of soil of his land.
Rent theory has some assumptions are as follows:
1) The rent is changes with the change in the fertitlity of the land, also the surplus getting from the
land changes with the fertility of the land.
2) If we concider land "A" is more fertile than land "B" then the rnt from land "A" will be more than
the land "B".
3) Rent theory concider the law of diminishing

Difference Between Neo Classical Economy And Neoclassical...
INTRODUCTION TO POLITICAL ECONOMY
SUBMITTED BY: –
DIVYA MISHRA(ROLL NO: – 03)
SOCIAL INNOVATIONS AND ENTREPRENEURSHIP (M.A 1ST YEAR) 1ST SEM
SUBMITTED TO: – Dr.SRI KRISHNA SUDHIR PATOJU SIR
Q–1 Difference between classical political economy and neo classical economy
Ans– The school ofclassical economics came into existence around 1750 and remained till
1800's.The book titled "wealth of the nations" written by adam smith in 1776 was beginning period
of classical economics that ended with "marginalized revolution"and thus neoclassical economics
developed. Neoclassical economics was just an extension of classical economics but the
fundamental ... Show more content on Helpwriting.net ...
He was the first economist to deal with economic problems in a systematic manner. In this book he
emphasizes importance of labor as source of wealth of a nation which can be increased by division
of labor .Division of labor necessitates exchange. So it leads to discussion of money as a means to
exchange.He discusses some problems like wages,profits and rent after discussing the problems of
value and price.
Division of labour–Unlike psysiocrats who regarded only land as the productive factor and
agriculture as source of all wealth Adam smith regarded labor as the wealth of the nation .He argued
that division of labour will increase productivity hence will increase the wealth of the
nation.According to Adam smith "division of labour is limited mainly by size of market". That is
only if there is a wide demand of goods ,it will be produced on a large scale and there will be lots of
scope for division of labour
Value–According to smith there are two kinds of values value in–use and value in– exchange.The
first one expresses utility of a particular object and the second power of purchasing other

Comparing Classical Economics And The Great Depression
The Great Depression of 1930 came as a shock to what was then the conventional wisdom of
economics and to be able to see why it is crucial that we look into the classical tradition of the
macroeconomics that dominated the economics profession when the recession began and the
Keynesian economics approach used to correct the challenge. It is said that the Great Depression
and the classical economics did not cooperate because the Great Depression reveals numerous flaws
in the economics while Keynesian economics collaborated well with the Great Depression, the
reason been that Keynesians found a solution to the great challenge that shook the entire countries of
the world.
The classical economics is the part of thought on economics that had built up in the hundred years or
so before ... Show more content on Helpwriting.net ...
Meanwhile, the Keynesians sees LRAS differently; they argue that the economy will be dead in the
long term. Thereby, laying more emphasis on the vital role aggregate demand will play in curing and
overcoming what we call recessionary or inflationary gaps, which arises when the equilibrium level
of aggregate production surpasses what could be produced at full employment.
Furthermore, there is diverse view about the cause of unemployment. The classical economists
debated that unemployment occurs due to the supply side factors such as frictional unemployment,
structural factors, et al., while Keynesians emphasizes on demand deficiency unemployment, which
means that unemployment is caused by insufficient economic growth and low aggregate demand

Differences Between Classical Economics And Neoclassical...
There are many differences between mainstream economics/neoclassical economics and political
economics. Currently, mainstream and neoclassical economics are the dominant approach in
economics. They use math to prove theories and to forecast events. If someone progresses as an
economics major, they will enroll in statistic classes and econometrics, which is more quantitative.
Since mainstream and neoclassical economics are more measurable, there is a higher chance for
error. In order to ensure the work is scholarly, it is important to make sure one confirms their
calculations. Furthermore, in neoclassical economics, there are many more assumptions. An
assumption is an "if" statement that many economists use to explain their thoughts. ... Show more
content on Helpwriting.net ...
Conservative, radical and liberal economists would respond to this topic in a variety of ways.
Liberals can't agree with economic stability, as they want wealth spread out equally among the
population. They also don't like the byproducts of economic growth, such as pollution. A liberal
economist would want to have government intervention, so they can help pass laws on climate
change. A liberal economist goal would be to set restrictions on pollution in order to mitigate
climate change. A liberal focuses on future generations and how today 's society can save the climate
for one 's kids and future generations. A Conservative ideology is that people take advantage of
government aid, and therefore refuse to seek employment. In addition, they don't feel government
regulations are necessary and run on the assumption that the markets are perfect. A conservative
economist would reduce environmental regulations. Their mindset is that it 's not vital to worry
about future generations. They are mainly focused on the present and have the mentality that the
byproducts of production are not an issue to the environment. They disagree with the liberal party,
mainly due to the fact that they view climate change as something we shouldn 't worry about. As
seen in the news, Trump is a great example of a conservative economist. He withdrew the U.S from
the Paris climate agreement. He doesn't want restrictions holding back businesses. If there were
restrictions on climate change

Difference Between Classical And Keynesian Economics
Parts of economic theories seem to constantly change because there is no perfect economy;
however, there are two categories in which most economists fall under: Classical and Keynesian.
Classical economists follow the theory described in Adam Smith's Wealth of Nations regarding a
Laissez–Faire policy with no government intervention. People who are considered to follow the
Keynesian economic theory generally favor government intervention in the economy during
recessions in the business cycle (Colander p. 524). Three well known economists fall into these
categories: Milton Friedman and Friedrich von Hayek were considered to be classical economists,
while John Maynard Keynes, developed the Keynesian theory. Friedman was a firm believer in
capitalism and that the market's guiding hand would help to regulate the economy. According to the
... Show more content on Helpwriting.net ...
Similar to Friedman, he promoted a Laissez–Faire style economy and figured that government
intervention during recessions would only make problems worse (Encyclopedia of World Biography
222). He also believed that the more regulations the government had on the economy, the less
freedom consumers had when making a purchase (223). During the Cold War, many economists
though the Soviet Union's economy would grow at such a high rate that it would be larger than the
United States' economy; however, Hayek found holes in these arguments and did not think this was
true. According to economist David Peterson, Hayek's argument was, "...prices that efficiently
allocate resources cannot be set by government fiat. When an economy lacks the daily input of the
individual decisions of millions of consumers...the result is colossal waste and inefficiency (86).
This contributes to Hayek's free enterprise view on the economy, that it should be consumers who
determine the prices of goods based on their demand, not the

Nature And Causes Of The Wealth Of Nations
Adam Smith is known as the originator of the first of the free–market capitalism, laissez–faire
kebijksanaan well as the father of modern economics. An Inquiry into the Nature and Causes of the
Wealth of Nations, or commonly abbreviated as "The Wealth of Nations" is a famous book by Adam
Smith that contains economic ideas now known as classical economics. Inspiration from this book
came from her teacher while studying at the University of Glasgow namely Francis Hutcheson and
college friend David Hume (Becker, 2007). Posts Smith also consists of a thorough explanation
megenai mercantilist writings and fisokrat that disentiskannya well be a material economic studies.
Antaara Smith dissent and you mercantilist one of the factors that determine prosperity, where the
mercantilists ... Show more content on Helpwriting.net ...
From the above explanation, it can be concluded that Adam Smith as the father of modern
economics with classical theory have new insights which in his time was the early stages of the
industrial revolution. Outstretched discussion of the theory of production costs, wages, profits, rents,
as well as the theory of development that take into account the value of the division of labor and
capital accumulation. Classical economic outlook is the cornerstone of personal interest (self–
interest) with natural independence, so that everyone knows exactly what is necessary and beneficial
for him. When compared with the previous understanding ideas, theories Smith tend to be more
integrated, consistent, deep, and is more common with a lot of talk about wealth. He also challenged
the view of the Merchantilist stating that wealth consists of cash and precious metals. According to
Smith, international trade is not merely to get the precious metals but for the exchange of
commodities necessary, expand the market and this will increase the division of

The Idea Of Competition : The Classical And Marxist Economics
This paper studies the idea of competition. What is competition? Do we need competition, why do
we need it? The paper further elaborates competition in aspects of two school of thoughts, the
Classical and Marxist economics.
Competitions are ubiquitous. It may be in the form of us seeking a promotion at work, company
competing for bigger market share. In fact, humans more often than not ,seek to achieve a superior
position relative to others in a variety of contexts (Garcia, Tor and Schiff, 2013). Simply put, an
undertaking with an aim of establishing gain by hindering the competitive edge of the rival party
involved. In economic sense, in a marketplace, there are buyers and sellers for a product existing at
variance, which would allow the price of products to change to counter the change in supply and
demand. In todays times almost every product has a substitute alternative, hence, a buyer would
have the convenience of switching to the cheaper alternative if price of a product becomes
unaffordable for them. Hence, the buyers have relative influence on the price of the products.
However in some industries there are only a few supplier of the products and services, due to the
absence of substitutes, which reduces the bargaining power of the consumers on the price of goods,
due to the producers having absolute power over the pricing of the goods.
The Classical economic school of thought reflects on competition as instrument in forcing of market
price to its natural level

The Pros And Cons Of Classical Economics
1. Classical economics, which claims universality and progress for everyone, is a class biased from
start. Reflect on this statement.
Development: It is increasing the standard of living by considering economics is the key function.
Every theory of development has functions of economics. It plays a vital role in social science. It is
widely considered as "committed" i.e., serves an interest especially class interest. Economists have
equal important like scientists, because these people concern with important issues like economic
growth, employment and development etc., Economic theories of development have own way of
History, projections, philosophical bias, practice, language and relations. These properties of
theories depend on particular ... Show more content on Helpwriting.net ...
He explained Ricardian theory as arithmetic precession which has ethical and social liberal
problems. He said state should protect individual liberty of citizens by which state can enhance with
good property rights and ownership. He supported smith theory of division of labor for efficiency.
State is important but should not over rule the economic realm. State should create legal and
political environment to enhance the self interest separate for market and state.
Conclusion:
He differentiated mercantilist's policies which benefited the elite people like feudal lords and
observed merchant–capital classes as agents for rationality and economic progress. In mercantilism
workers are not interested whereas here they become active by creating free market conditions of
production and trade. He emphasized on values and science, as science laws are applicable to
economics for growth and development. He neutralizes and universalizes the class bias form
Mercantilism.
Classical economics is varied from Smiths laws of competitive behavior, self interest and rationality
of markets by capitalists. It emphasized on production, trading and scientific innovations in the

Cornelius Vanderbilt : Reaped The Benefits Of Classical...
Classical liberalism was a very popular subject during the time of Cornelius Vanderbilt. The source
shows the mansion he was able to afford due to the fortune he gained in the shipping and railroad
industries. The caption explains the house being worth around $160 billion in today's dollars. There
is no doubt that Vanderbilt reaped the benefits of classical liberalism in his time. Vanderbilt would
likely argue that he deserved everything, because unlike the way the feudal system was set up, he
worked for the money that he got. Vanderbilt would likely have a more right wing ideology, and
have strong opinions regarding the benefits of classical liberalism, as he was able to see the best of
it. People who would agree with the idea of classical liberalism would likely argue that Vanderbilt
worked for the money he deserves, and should not have to give up his riches for people who have
not worked as hard as he has. In today's terms, Vanderbilt would have likely been seen as a
conservative, believing in little government control over economics. A person like Robert Owen
would likely be unhappy with the way Cornelius Vanderbilt ran his business, as he believed in the
idea of factory owners giving up some of their riches in order for the workers to gain a richer quality
of life. Vanderbilt is one of the few people who reaped the rewards of classical liberalism, so it
would be no surprise for him to want to have a free market in place. Classical liberalism allowed the
rich to become

The Theories Of Neo Classical Economics
4.1 Positive outcomes Based on the theories of neo–classical economics, Greener (2008) proposed
two main types of benefits of the promotion of markets in welfare service delivery: 1) empowering
purchasing power of service users; 2) improve competition and efficiency of providers. These
benefits of marketization represent in the field of care for older people. First, the market provision
empowers service users to 'exercise consumer sovereignty' (Greener, 2008) through greater
opportunities of choices (Daly and Lewis, 2000; Drakeford, 2007). In respect of this, the market
could improve quality of services and push the older care move from producer–driven to consumer–
driven provision. Second, market mechanism emphasizes the improvement of quality and reduction
of costs through competition among providers, which inherently promotes efficiency (Brennan et al.,
2012). Yet, there is no agreement of all these benefits has been taken place in practice or not. For
example, Lewis and West (2014) argue that changes in 'greater choice', 'flexibility', and
'responsiveness' is very little, but the cost has been saved indeed. The benefits of ideal market have
certain conditions: enough information to both buyers and sellers; duly influence on price per unit;
and no sunk costs for entering and exiting the market (Greener, 2008). In the field of social care, it's
difficult to reach these conditions (Land and Himmelweit, 2010). As Brennan and his colleagues
(2012) argued, an ideal care market

Difference Between Classical And Classical Economic Thought
The history of macroeconomic thought and policy was developed through different phases mainly
marked by the depressions, recessions and expansion of the 1930s, 1960s, 1970s, 1980s, 1990s, and
2000s. Various macroeconomic theories were developed during these periods. Among them,
Keynesian and classical economics addressed economic problems such as unemployment issue with
similarities but also differences.
In this essay, I will identify similarities and differences in Keynesian and classical economic
thought. Then, describe how Keynesian and classical economists address the issue of
unemployment. And finally, I will describe new developments since the 1980s. To identify
similarities in Keynesian and classical economic thought let us first examine their definitions:
Classical economics is the body of macroeconomic thought associated primarily with 19th–century
British economist David Ricardo that focused on the long run and on the forces that determine and
produce growth in an economy's potential output.
Keynesian Economics is the body of macroeconomic thought that asserts that changes in aggregate
demand can create gaps between the actual and potential levels of output, and that such gaps can be
prolonged. It stresses the use of fiscal and monetary policy to close such gaps.
We notice from those definitions that both thoughts focus on how an economy reaches its potential
output through various factors.
Unlike similarities, there are more differences in Keynesian and

Economics And The Classical System
1. Economics would be better described by a variation on the term 'chrematistique' rather than our
current discipline's name, which stems from 'oeconomica' because there is a "natural" way of
making money and the "unnatural" way of making money. In the book Teachings From The World
Philosophy it states that there are the elements of true wealth but there is also another art of
acquisition, which is commonly and rightly called the art of making money (Heilbroner 8). I believe
that there is a merit in splitting economics into Marginalist and a Classical approach to economics
because the classical system was a circular process between production and consumption and
Marginalism is a one–way avenue from production to consumption. If these did not spilt then I
believe no one would agree on anything because they are two different views which also I believe
gave us the best possible set up because it allowed to perspectives for people to think about.
2. Economics did not exist for many centuries still after Aristotle defined the root 'oeconomica'
because in the early portion of civilized life there were only two method; traditional and command.
Traditional was the passage of tasks/jobs, from one generation to the other, which still holds in some
under develop countries and command, which was the enforcement of economic survival by
dictatorship. Both of these worked because they were simple and did not need any economic
expansion, which means there was no need for and

Distinguish Between Classical Economics And Neo-Classical...
Distinguish between classical political economics and neo– classical economics
The study of trade where, there is limited resources is available is called economics and it is divided
into two parts:
Classical political economics:
Classical political economics directly deals with the long run investment in the economy such as
development and growth, its original name was economics. Classical political economy was a
school of thought which was predominate during the just time before the industrialization and till
the middle age of 19th century, before 19th century it was taken over the neo classical school of
economics thought.
Marx said that the factor which unite the representative of classical political economy into one
intellectual school ... Show more content on Helpwriting.net ...
The period 1870 to 1900 was also characterized by the questioning of the classical assumption that
the laissez–faire was an ideal government policy and the eventual demise of classical political
economic theory and neo–classical political economics. This conversion was neither automatic nor
spontaneous but it was critical for professionalization economics.
Neo – classical political economics is attributed with incorporate the original classical cost of
production theory with the usefulness in a bid to explain commodity and factor of prices and the
allotment of resources using marginal analysis. Although David Ricardo furnish the methodology
basics of neo– classical political economics. Alfred Marshall was regarded as the father of neo –
classical economics and Marshall was credited with introduced the concept demand and supply,
marginal utility, price elasticity of demand and cost of production. Marginlist eco nomics or neo
classical economics theories emphasized that the value use of demand and supply as crucial of
exchange value. Similarly neo classical, Karl Menger n Austria, William Stanley Jevons in England
and Leon Walras in

Research Paper On John Stuart Mill
The Best Known 19th Century Philosopher
By: Nelza Martins John Stuart Mill, born in London in the year 1806, had no escape from becoming
anything less than brilliant. His father, James Mill, made sure he received the best education at a
very young age. Nonetheless, the subject of interest was economics, which his father was very
knowledgeable of and expected him to succeed in it as well. James Mill wrote a book based on the
summaries written by a teenage John Stuart Mill at the end of each economics session. The young
Mill grew into a very intelligent man although he suffered with mental crisis. He had a lot of
wisdom to offer and played an essential role in the era of classical economics. John Stuart Mill
revealed some hints of a socialist ... Show more content on Helpwriting.net ...
This is obviously expected due to the beliefs discussed earlier on. Individual enterprise is the
economic system encouraged by the American Constitution, therefore, it is what we live today.
Businesses are carried out by private individuals, and not by organizations or state. Mill, on the
other hand, was part of the socialistic group that radically believed in sharing. Mill wanted to see
society grow by alleviating the competition between people. He was against the system of central
administration and expressed a greater concern for the community rather than for individual
interests. In the book The Age of The Economist, by Daniel R. Fusfled, it is mentioned that Mill did
not believe an economy constructed around individual enterprise was the ultimate end of the
economic system. In conclusion, although many of John Stuart Mill's values have not come to
endure the never ending progress of everyday life, he was undoubtedly the best philosopher of his
time. He wrote a book called "Principles of Political Economy", which was used as a textbook for
economics during more than a quarter of a century. The accomplishments he attained are truly
remarkable; despite the fact that he was sociological ideas are mostly discarded today. There is
much to absorb from his writings, which keep his thoughts alive through

George Smith Wealth Of Nations
By this he meant that if they can sell the items the public will buy then the result will be to make
money. If they can satisfy the needs of the consumers then they will receive bountiful rewards. In
Smith's head this system not only makes the baker, butcher, and brewer wealthy, but also the nation
as a whole. When the citizens are working productively to make themselves better then the nation
will prosper too. In today's society the invisible hand theory seems to lead capitalism and free
markets efficiently through controversy of supply and demand for deficient resources, other than for
the benefit of an individual.
"The Wealth of Nations" argues that division of labor and the specializing in work will yield
abundance. Smith states, "It is the great multiplication of the productions of all the different arts, in
consequence of the division of labor, which occasions, in a well–governed society, that universal
opulence which extends itself to the lowest ranks of the people". The ideas that Smith presents in
"The Wealth of Nations" has effectively changed the import and export livelihood. Smith constituted
the idea that is currently known as GDP or Gross Domestic Product and he fought for free
commerce.
Before Smith wrote "The Wealth of Nations", all countries used gold and silver as a basis of wealth.
Although, Smith disliked ... Show more content on Helpwriting.net ...
We do know that they both agree on the rent theory but many the disagreements are rarely based on
theoretical criteria but rather the policies and interpretations. Another equally argued disagreement
between the two was the economic method and exchange value. Ricardo used costs to figure the
value but wanted labor to be the one significant exchange value. Malthus argued that there should be
a cost analysis integrated with the supply and demand scheme. Malthus tried to explain the measure
of value and the exchange of

Difference Between Liberalism And Anarchism
The multiple strands of both liberalism and anarchism prevent any continuous agreement between
the main ideas of the two ideologies. The fundamental belief that mankind comprises rational free
thinking individuals is common to both view points. However, the level to which the individual can
be trusted differs between the two. Anarchists place greater emphasis on the ability for individuals to
excel without the interference of an overarching body. Liberals argue that the state is a needed
device to ensure that the liberty of each individual is maintained and not limited by other
individuals. Liberals believe that individuals are rational and able to recognise their own self–
interest, this being the main reason why liberals support high levels of individual freedom only
constrained to some extent by the state. Liberal individualism, especially within classical liberalism,
means that individuals are atomistic and that they will act rationally in support of their own self–
interest rather than in the interests of society as a whole. Although the liberal adoption of laissez–
faire economics promotes an atomistic view on individuals, it also argues that an atomistic approach
to economics will benefit the entirety of society. However, modern liberals have developed ... Show
more content on Helpwriting.net ...
In addition, both ideologies struggle to have a distinct set of agreed ideas and therefore a clean
comparison of the key ideas of each ideology is difficult. The various anarchist views of economic
systems fundamentally disagree with the economic principles of both classical and modern
liberalism. Although both have a positive outlook on human nature they disagree on the extent to
which humans require a structure within which to operate. Anarchism can therefore be seen as the
extreme–liberal and extreme–socialist forms of liberalism. Anarchism, in all forms, is the critique of
the centrist liberal

Classical Laissez-faire Economics Essay
Classical Laissez–faire Economics The earliest organized school of economic thought is known as
Classical. The father of this school is Adam Smith. Smith used the concept of the invisible hand to
describe the role of the market in the allocation of resources. In the market, the interaction of
demand and supply determines how much of a good will be produced and the price that is charged
for that good. Absent any explicit guidance mechanism, the invisible hand guides participants in the
market towards an outcome that efficiently allocates resources to the production of goods that
society desires. Other important classical economists include David Ricardo who introduced and
developed the concepts of comparative advantage and the ... Show more content on Helpwriting.net
...
This implies that all workers that desire jobs will have them, and those who are unemployed
voluntarily choose to be so. · The government has a minimal role over the course of the business
cycle, and left alone the economy will gravitate toward full employment. In the long run,
unemployment is not an important public policy concern as the unemployment present will be
voluntary. · Economic analysis should emphasize the study of markets and how they effectively
operate. An Early Theory of Value One of the most important questions early classical economists
attempted to answer was how the value or price of a good is determined. Smith described how the
interaction of supply and demand in the market determined a good's price. Smith needed to go
further and explain why two goods with identical demands would have different prices. According
to Smith, the prices of goods are determined by what it costs to produce them. Since the majority
input used in production during the eighteenth century was labor, Smith developed a labor–based
theory of prices. The price of a good reflects the amount of labor used in its creation. One good's
price is higher than another's because of the extra labor used in its production. However, in Smith's
model the price of a good is independent of the amount produced, resulting in a horizontal supply
curve. From this base, Ricardo introduced the idea of diminishing returns in the factors of

Socialism vs Liberalism
The terms 'socialism' and liberalism' are used a lot nowadays, and many people often mistake one
for the other. In order to differentiate between these two terms, one must keep in mind the clear–cut
differences by defining the prevailing ideology of each term. The tenets of socialism assert that the
state should wield total economic power by manipulating prices of goods and wages of workers.
Furthermore, socialism requires people to submit to the rule of law. In return for their compliance,
citizens are provided with resources rationed by the government. On the other hand, liberalism is
more challenging to define since it is further divided into classical and modern liberalism. Classical
liberalism states that the government should take ... Show more content on Helpwriting.net ...
The late U.S. President Franklin Roosevelt himself defined liberalism as the 'saving grace for the
far–sighted conservative,' and also 'reform what you want to preserve.'
Capitalists and supporters of democracy believe that socialism and modern liberalism are
detrimental to economic progress. Because prices of goods and wage of workers is controlled
directly by the government, privately–owned companies and institutions cannot flourish under a
socialist or modern liberalist government. People who value freedom of speech and human rights
likewise oppose socialism and modern liberalism, because they believe that such ideologies limit a
citizen's right to choose which products to buy, what job to take, what religious belief to espouse.
Even though modern liberalism is more subtle and suave than socialism, it still ends up giving too
much power to the government in the guise of economic, political, and social security.
Summary
1. Socialism says that only by granting the state total economic and political power can economic
progress and equality among citizens be attained.
2. Classical liberalism says that the state should only take over an institution to ensure that citizens
can freely benefit from that particular institution's services. Classical liberalism does not require the
thorough enforcing of law and order to reach economic progress and equality.
3. Modern

Adam Smith's Theory Of Classical Theory And Natural Law
These forms of natural law laid the foundation for later economic principles and helped to shape and
define the concepts of wealth and utility in later works. In this section, I will explore the different
relationship of natural law with Classical thought, specifically in relation to wealth and utility. I
assert that the division of labor acted as a form of natural law for this period. Beginning with Adam
Smith, his work Wealth of Nations, this division of labor arises "Not due to human wisdom, but the
necessary slow and gradual consequence of the propensity of human nature to barter and exchange
one thing for another. It is by barter and treaty and purchase that we obtain from one another mutual
goods that we are in need of (Smith, 175). ... Show more content on Helpwriting.net ...
This refers to the marginal utility theory of value. On a daily basis, a person will derive greater
utility or value in a diamond. Of course, in rare and dangerous situations, water may be of more use
in value to a person.
In regards to wealth, Smith notes man's drive for such aspects. "The jurisdiction of man within is in
the desire of praise–worthiness and in the aversion to blame–worthiness. We are driven by
possessing the qualities and actions that we love and admire in others. Further, we are driven by the
dread of possessing undesirable qualities and actions that we see in others" (Smith, Excerpts Theory
of Moral Sentiments) Guided by the division of labor, we are driven towards notions of
accumulating wealth based on admiration of others with this trait and fear of others that lack this
trait. In the text, Smith discusses the example of how a person cares more about "his little finger"
than "the ruin of a hundred millions of his brethren" (Smith, Excerpts Theory of Moral Sentiments).
As a result, this reflects the notions of wealth and utility based on market values in the division of
labor. While not using the term, Smith incorporates the concept of alienation as a result of man's
drive for wealth, as an expense of workers in the division of labor.
In comparison, David Ricardo believed that it was appropriate to use an expanded definition of
utility to generate

Classical Economics During World War II
Classical Economics During World War II
Classical economics, which was the most popular economic school in Great Britain in 1870s,
focused on the independent economic growth and economic freedom.(Popa). But during the World
War II, most of economic historians described that the result of economic war between Keynesian
Economics and Classical Economics at that time came out with the triumph of Keynesian
Economics. Due to relatively strict necessary conditions of the Classical Economics Model, there
occurred a great fall of classical economics theory during that unstable wartime, when brought a
lack in labor market, a frictional allocation and a variable expectations.
First of all, because classical economics model requires a steady Aggregate Supply as a basic
element of the model assumptions, so that the inevitable decrease caused by a lack in labor market
affected the pragmatic nature of the classical economics. It cannot be denied that during wartime, a
country would require more people, who worked in a ... Show more content on Helpwriting.net ...
It is well–known that "warfare reduces capital stock through the destruction of infrastructure,
productive capacity and housing through bombing and fighting, and results in a relocation of food
and other production into military production."(Kesternich). So, if wars alter long–term economic
growth, it would permanently depress the economic prospects of future generations, and bring an
unstable expectations toward the future economy to them. As a factor that could influence the
certain supply, expectation of consumers not only would lead the future economy, but also would
ruin the establishment of a classical economic model. Because, there is one of the brief assumptions
building a classical model: "agents have stable

Two Theories Of Economics: Classical And Keynesian Economics
As interesting as the subject of economics is, it's a subject that isn't easily understood. In order to
grasp the subject you have to really understand the concepts. And it's not like riding a bike, once you
know how to do it you will always have it engraved in your head. I will attempt to highlight the key
factors of the two theories of economics: classical economics and Keynesian economics.
Since Classical Economics is considered to be the first school of economics. I will start to explain
this concept first. In the 18th and 19th centuries, there was a group of economists that worked
together to develop theories to explain how market to market relationship work between each other.
The most important contributor to the classical school of economics was the great economist Adam
smith, whom is considered the founder. Adam Smith stated in an excerpt from 'An Inquiry into The
Nature and Causes of The Wealth of Nations'. "By pursing his own interest, he (man) frequently
promotes that (good) of the society more effectively than when he really intends to promote it. I
(Adam Smith) have never known much good done by those who affected to trade for the public
good." You will understand that from those thoughts Adam Smith created the foundation of classical
economics.
It is key to point out the basic structure or assumptions that form classical economics. The three
theories that sticks out to me are: Say's Law: Say's law suggests that aggregate production in an
economy generates

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