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LC Econ Hist of Econ
LC Economics- History of Economic Thought
| Question | Answer |
|---|---|
| Cannons of Taxation | Ability to pay, certainty with regard to the amount to be collected, convenience of payment and low cost of collection are rules for taxation put forward by Adam Smith. |
| Consumer Surplus | The difference between the total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) and the total amount that they actually do pay (i.e. the market price). Marxhall (Neo-classical). |
| Economic Rent | Any surplus earned by a factor of production above its supply price. Ricardo (Classical) |
| Fiscal Policy | Any action by the government which affects the size, structure and timing of government revenue and expenditure. Keynesian. |
| Iron Law of Wages | If wages rise above the subsistence level (that is, the minimum level required for survival), an increase in population results, which again forces wages down to the subsistence level. Thomas Malthus (Classical) |
| Laissez-faire | Abstention by governments from interfering in the workings of the free market. Physiocrats, Classical, Monetarism |
| Law of Comparative Advantage | A country should specialise in the production of those goods at which it is relatively most efficient and obtain its other requirements through international trade. Ricardo (Classical) |
| Law of Diminishing Marginal Returns | If increasing quanties of a variable factor are combined with a given amount of a fixed factor, eventually a stage will be reached where the addition to total output (marginal output) will decline). Turgot (Physiocrats) |
| Liquidity Preference Theory | The desire of an individual to hold his/her wealth in cash form and its effect on Interest-rate determination. Money may be demanded to satisfy a number of motives: Transactions Motive, Precautionary Motive, Speculative Motive. Keynes (Keynesian). |
| Marginal utility theory of value | The value of a commodity determined by its ability to satisfy human needs. Marshall (Neo-Classical). |
| Monetary Policy | Management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity. Milton Friedman (Monetarism) |
| Paradox of Thrift | Individuals try to save more during an economic recession, which essentially leads to a fall in aggregate demand and hence in economic growth. Keynes. |
| Price Elasticity of Demand | Responsiveness of quantity demanded of a good to a change in the price of that good to a change in the price of that good. Marshall (Neo-Classical) |
| Protectionism | Shielding a country's domestic industries from foreign competition by taxing imports. Thomas Mun (Mercantilism) |
| Quasi Rent | Economic rent earned by a factor of production in the short run which will disappear in the long run once the supply of the factor is increased. Marshall (Neo-Classical). |
| Say’s Law | Supply creates its own demand. Classical. |
| Subsistence theory of wages | Theory advanced by David Ricardo (Classical) that held that the market price of labour would always tend toward the minimum required for subsistence. |
| The labour theory of value | The value of an item is equal to the amount of labour that goes into producing it. Smith (Classical), Marx. |
| The Multiplier | The factor by which gains in total output are greater than the change in spending that caused it. Keynes. |
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MrFromholz
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