Meaning of the Elasticity of Demand The Elasticity of Demand is related to the Law of Demand, it is the measure of the change in the demand of a commodity with respect to the change in the price of the commodity. In simple words, elasticity of demand refers to an increase or decrease in demand, …
Economic theory is a body of knowledge that seeks to explain how economies work. It assumes that individuals and firms make rational decisions to maximize their utility or profits. Economic theory is used to analyze a wide range of economic phenomena, including inflation, unemployment, and economic growth.
The most influential schools of thought in Economic Theory
Classical economics is a school of thought that emphasizes the importance of markets and individual self-interest. Classical economists believe that the economy will naturally tend towards equilibrium, and that government intervention is often counterproductive.
Keynesian economics is a school of thought that emphasizes the importance of government spending and investment in stimulating economic growth. Keynesian economists believe that the government can play a vital role in preventing or mitigating economic recessions.
Monetarism is a school of thought that emphasizes the importance of monetary policy in controlling inflation. Monetarists believe that the government should focus on controlling the growth of the money supply to keep inflation in check.
New classical economics
New classical economics is a school of thought that combines elements of classical economics and monetarism. New classical economists believe that markets are efficient, and that government intervention is often counterproductive.
New Keynesian economics
New Keynesian economics is a school of thought that combines elements of Keynesian economics and neoclassical economics. New Keynesian economists believe that markets are not perfectly efficient, and that government intervention can sometimes be helpful in promoting economic growth.
Economic theory is a complex and ever-evolving field. There is no single, universally accepted economic theory. Different schools of thought offer different insights into how economies work, and different economists often disagree about the best way to promote economic growth and prosperity.
Despite the disagreements, economic theory is a valuable tool for understanding how economies work. It can be used to analyze a wide range of economic phenomena, and it can help policymakers make better decisions about how to manage the economy.
Introduction to Robbins Definition Robbin’s definition of Economics challenged Dr. Marshall’s definition of Economics which was a major improvement over the definition of Adam Smith and other ancient Economists. Before Prof. Lionel Robbins, Prof. Marshall tried to give a complete and faultless definition of economics. At that time people started thinking that Economic Science has …
Economics is a science of choice-making. Introduction to Marshall Definition Marshall definition of Economics was the first to challenge Adam Smith’s definition. Dr. Alfred Marshall (Born. 26 July 1842, Died 13 July 1924) was the first Economist, who denied the wealth-related definitions of Adam Smith, which was in vogue for a long time, in his …
Introduction to Keynesian Theory of Employment Keynes gave Keynesian Theory in his volume “General Theory of Employment, Interest, and Money” He not only criticized the Classical Theory of Employment but also analyzed those factors that affect the employment and production level of an economy. Most of the modern economists agree with the concept of Keynes. …