Economics Concepts Flashcards

Study Notes

Adam Smith

Authored "The Wealth of Nations" in 1776, advocating for self-interest as a driver of societal wealth.
Introduced the concept of the "invisible hand" symbolizing the free market dynamics.
Emphasized the benefits of division of labor on productivity.
Supported free trade as essential for economic growth.

Milton Friedman

Promoted monetarism, likening the economy to a vehicle with money supply as accelerator/brake.
Established the concept of "velocity" of money, asserting its stability compared to Keynesian views.
Proposed that increased money supply leads to proportional price increases in the short run, ignoring government spending's significance.

Alfred Marshall

Introduced marginalism in economics, explaining gradual adaptations by businesses and consumers.
Identified three time frames in economic reactions: demand fluctuations, short-run supply changes, and long-term adjustments by producers.
Developed concepts of "marginal utility," the law of demand, and price elasticity, emphasizing the intersection of supply and demand.

Thomas Malthus

Regarded as the first professional economist, he published views on population growth and food supply in 1766.
Argued that population growth outpaces food supply, leading to societal decay.
Differentiated between positive and preventative checks on population, such as war and famine versus birth control measures.
His predictions on population trends were flawed due to oversight of economic factors such as immigration and technological advances.

John Stuart Mill

Expanded on Jeremy Bentham’s utilitarianism, forming the Utilitarian Society.
Criticized Bentham's approach for neglecting higher moral values like honor and dignity.
Authored "Principles of Political Economy," advocating for progressive taxation and welfare reforms.

John Maynard Keynes

Challenged classical economics, arguing that insufficient demand leads to economic downturns.
Disputed Say's Law regarding the link between savings and investment.
Developed the concept of the Keynesian multiplier, highlighting the cascading effects of spending changes.
Criticized reliance on mathematical precision in economic theories as misleading.

John Kenneth Galbraith

Critiqued consumer culture, asserting that advertisers create artificial desires, coining the term "dependence effect."
Recognized Friedrich von Hayek’s views on the significance of genuine human desires beyond imposed wants.

David Ricardo

Introduced the Law of Comparative Advantage in 1809, advocating for specialization based on opportunity cost.
Emphasized the efficiency of free trade in maximizing goods consumption for households.
Argued against protectionism, suggesting tariffs hinder economic growth except for specific cases like national defense.

Karl Marx

Explored class struggle and revolution as integral to societal development in his "Communist Manifesto."
Predicted capitalism's collapse due to inherent contradictions and class exploitation.
Identified a sequence of economic decline culminating in the proletariat's misery.
Criticized for offering no implementation strategy for his theories and overlooking the entrepreneurial value in labor.

Thorstein Veblen

Contributed to institutional economics, emphasizing societal norms over traditional economic categories.
Challenged the assumption that workers are motivated solely by monetary compensation.
Introduced the concept of the "emulatory instinct," arguing consumer behavior is influenced by social perceptions of status purchases.

Description

Explore key concepts from the field of economics with this flashcard quiz, highlighting the influential ideas of economists like Adam Smith. Dive into the principles discussed in 'The Wealth of Nations' and understand how self-interest and the free market shape society. Perfect for students and enthusiasts of economic theory.