Economics is a relatively new science. At first, there was no need for the study of Economics because everything belonged to the king.
In 1776 Adam Smith wrote the famous book "The Wealth of Nations" and that book was the beginning of classical economics. It is quite ironic that the beginning of economic study was the same year as the American independence. Mr. Smith had the idea that individuals would always do what is best for themselves, and because of this, the cumulative result would be what is best for the whole nation. This thought reminded me of the second rule from our text: "Economists assume that individuals make choices that seek to maximize the value of some objective, and that they define their objectives in terms of their …show more content…
Our text used the work of David Ricardo to expand on the classic thought. As I studied the different ideas I learned that he is most famous for his theory of comparative advantage. While this isn 't what this lesson is about, I find it interesting that our push toward globalization is similar to some of his ideas.
Keynesian economics was developed by John Maynard Keynes. He wrote the book, "The General Theory of Employment, interest and Money" in 1936. At this time, the world had been experiencing the great depression.
Mr. Keynes felt that employment was the most important part of economics because if people do not earn money, then they have no money to spend. This idea is called "demand-side policy". i.e. If people are working, then the economy is good. If people are not working then the economy is bad. (1)
Demand side economic theory makes the case that the government should increase spending when unemployment is high. Even if the government has to borrow the money it is important to put more money into the economy so that people will have money to spend. Otherwise, markets will dry
In 1776 Adam Smith wrote the famous book "The Wealth of Nations" and that book was the beginning of classical economics. It is quite ironic that the beginning of economic study was the same year as the American independence. Mr. Smith had the idea that individuals would always do what is best for themselves, and because of this, the cumulative result would be what is best for the whole nation. This thought reminded me of the second rule from our text: "Economists assume that individuals make choices that seek to maximize the value of some objective, and that they define their objectives in terms of their …show more content…
Our text used the work of David Ricardo to expand on the classic thought. As I studied the different ideas I learned that he is most famous for his theory of comparative advantage. While this isn 't what this lesson is about, I find it interesting that our push toward globalization is similar to some of his ideas.
Keynesian economics was developed by John Maynard Keynes. He wrote the book, "The General Theory of Employment, interest and Money" in 1936. At this time, the world had been experiencing the great depression.
Mr. Keynes felt that employment was the most important part of economics because if people do not earn money, then they have no money to spend. This idea is called "demand-side policy". i.e. If people are working, then the economy is good. If people are not working then the economy is bad. (1)
Demand side economic theory makes the case that the government should increase spending when unemployment is high. Even if the government has to borrow the money it is important to put more money into the economy so that people will have money to spend. Otherwise, markets will dry