classical follow the basic assumption that 1.economy is in ful employment.... 2. the wages and prices are very flexible 3. there is no need of fiscal or monitary policy 4. the invisible hand make the economy self correctable 5. so the Aggregate supply curve is Vertical according to classicals so any rise inaggregate demand will increase prices not production Keynesian follow the basic assumptions that 1. economy may not be in full employment in short run 2. wage are rigid and prices
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provides society with the false perception that people are perfectly rational‚ computationally proficient (one could argue‚ “robotic”) beings‚ who make choices in order to maximise happiness. On the other hand‚ behavioural economists retain intelligence. A behavioural economist has common sense‚ and thus‚ realises that people are not perfect. So basically‚ without any long‚ really clever words‚ behavioural economics is arguably the study of economics BUT (and yes‚ this is a big but) without assuming
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important business philosophers that made similar accusations towards this idea of an invisible hand. One famous example made by Leonard E. Read is ‘I‚ Pencil’. The invisible hand theory has a large emphasis on freedom in a market. Adam Smith‚ an economist in 1976‚ stressed the
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the effect of taxes on a population‚ and why businesses succeed or fail. People who study economics are called economists. Economists seek to answer important questions about how people‚ industries‚ and countries can maximize their productivity‚ create wealth‚ and maintain financial stability. Because the study of economics encompasses many factors that interact in complex ways‚ economists have different theories as to how people and governments should behave within markets. As one can see‚ economics
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1) In the article‚ “The Myth of Asia’s Miracle”‚ the economist Paul Krugman discusses the rapid growth that Southeast Asian countries experienced after World War II. Many economists at that time predicted these countries could continue growing at that rate. He argues that East Asia is just like the Soviet Union had economic growth that was based on the expansion of inputs‚ rather than growth in output per unit input. Krugman claims that‚ since the Asian growth depends on investment rather than technical
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America which Federal Reserve has held a pretty low official interest rate close to zero which makes firms can sell bonds with slightly higher returns‚ has hurt many Americans‚ especially those retirees whose personal income has fallen. So some economists estimate that the phenomenon are benefiting those corporations by borrowing and keeping the cash‚ but it is not benefit for the whole economy yet. According to the a variety of data by researched‚ we find that American firms have been saving more
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The Concept of Elasticity Themes of Today’s Lecture What is an Elasticity? Why Economists Use Elasticity Definitions of Elasticity How to Compute the Elasticity of Demand and Supply Examples of Elasticity of Demand and Supply What is an Elasticity? Measurement of the percentage change in one variable that results from a 1% change in another variable. When the price rises by 1%‚ quantity demanded might fall by 5%. The price elasticity of demand is -5 in this example. Different
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the minimum wage‚ according to the White House press‚ will have some positive effect for low-income families; however‚ many companies are opposed to raising the minimum wage. A higher wage will have a direct impact on the cost of business. Some economists argue that higher minimum wage will result in an increased unemployment percentage. Although minimum wage laws can fix hourly pay‚ they cannot guarantee jobs. Employers are not willing to pay a worker more than the value of the additional product
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Classical economics school of thought. The Classical economics theory teaches and is based on the idea that the economy can stabilize and run effectively on its own‚ without any type of assistance. There are three basic assumptions of Classical Economists theories. One is that all prices must be susceptible to flexibility downward just as easily as upward. This is proven not to be the case for downward prices because of factors such as laws or unions. Another assumption is what is called‚ “Say’s
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David Ricardo‚ a 17 century English political economist‚ is considered an extremelyinfluential classical economist along with Adam Smith and Thomas Malthus. Ricardo was bornon the 27th April 1772 and helped develop key economic theories until his death on the 11thSeptember 1823 1. Ricardo grew up in a dominate English family where his father was also aneconomist‚ Ricardo credits his father and the reading of Adam Smith ’s book The Wealth ofNations for his interest of the social science‚ economics2
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