Questions tagged [classical-economics]

Classical economics refers to work done by a group of economists in the eighteenth and nineteenth centuries. They developed theories about the way markets and market economies work. The study was primarily concerned with the dynamics of economic growth. It stressed economic freedom and promoted ideas such as laissez-faire and free competition.

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How useful are basic economics (elasticity / consumer & producer theory) in real life?

I am thinking how these concepts will be applied in the industries / at a job. For example I could see elasticity as useful in projecting the outcomes of supply ...
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In search of a proper explanation of classical concept of employment

We studied Microeconomics in our first year college classes, and now in second year we have Macroeconomics. We have in our syllabus Keynesian theory of employment, and the books issued by college ...
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What is the main reason behind the study of Neo-classical economics, instead of behavioural economics?

In the courses, we are taught economics theoretically,inclusive of assumptions,simplicity and inferences based on the optimal thinking. But, later on we see that most of the theories and hypothesis ...
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Is this really a valid description of AS&AD after lockdown?

I understand that in the short run AS decreased (supply chains) and AD increased (stimulus, post-lockdown behaviour). But what's up with the lines in the long-run? Also is this even a valid way of ...
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Post-Keynesian theory and households?

"money must be introduced as part of the production process. Such a process is inherently dynamic, as entrepreneurs in each period must produce a new flow of commodities.” and households have no ...
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Keynesian-classical synthesis

The trouble with classical interest theory, said keynes was that it assumed the fixity of the key economic variable the level of employment was assumed fixed at full employment.. How this assumption ...
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Classical Theory of Inflation - Money Supply, Money Demand and Prices

In every textbook, website I read when talking about the classical theory of inflation, I see the diagram below which depicts the value of money, prices etc. This one below is from Spark notes (https:...
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PPC's real output value

Does every point on the PPC have the same real output value? If not, then what point on the PPC does the long-run aggregate supply represent? LRAS is supposed to be vertical on the real GDP if the ...
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Question on Dichotomous system

In The Classic economy, we consider the following macroeconomic model $$Y=F(K,N)$$ where $F_N>0$, $F_K>0$, $F_{KK}, F_{NN}<0$ and $F_{NK}>0$ $$F_N(K/N)=w/p$$ The labor supply function is $$...
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Which classical liberal economists promoted the privacy and secrecy of businesses?

Quinn Slobodian (2018) writes: the idea of businessmen opening their account books beyond the firm represented a revision of the classical liberal vision. The privacy of the businessman was no ...
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Real wages fluctuation as per classical economics

I have just started studying Macroeconomics and have noticed that as per the Classical economics, the real wage level will always remain same because any change in price level in the market is ...
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In Smith's theory, what is the difference between the "nominal price" vs. "market price" and "real price" vs. "natural price"?

In Adam's Fallacy, Foley writes: "Smith distinguishes what he calls the nominal price of a commodity (the amount of money for which it exchanges) from the real price of the commodity, the amount of ...
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Do Keyensians believe that it's wrong for households to aggresively save money?

Many Austrian/Neoclassical websites argue that Keynes and Keynesians demonise saving and encourage individual people to spend rather than save. Someone (not an economist) recently told me that I need ...
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Why does the profit function in standard neoclassical theory have exactly one maximum?

In neoclassical theory is said that the highest profit occurs when Marginal Cost equals Marginal Revenue, but this condition wouldn't be enough to determine the maximum if there were more than one. ...
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Is loss in tax revenue a negative externality?

I was thinking about how online gambling could cause numerous governments to face a reduction in tax revenue from conventional gambling, upon which taxes do apply in most countries. If governments ...
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By what means do prices change?

The classical supply and demand theory states that prices and quantities of a given good (in a perfectly competitive market) are determined by the supply and demand of that good, a shift in the demand ...
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Short run Aggregate supply curve is horizontal or positively sloped?

I want to understand the adjustment process from Very short run production decision to Short run production decision to Long run production decision. As far as I've understood: consider an increase in ...
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What are exactly considered resources in modern economics?

I'm taking a basic course in economics and I'm trying to understand what the term "resources" really mean in this context. Reading this article, I found out that in classical economics, resources are ...
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How empirical was Adam Smith's The Wealth of Nations? What about some other "big books"?

How empirical was Adam Smith's The Wealth of Nations? What about some other "big books"? That is, how much empirical research does it contain? And thus, what kind of "epistemological accuracy" does ...
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Difference between Negotiable Instrument and Financial Asset

So here are the two pages I was reading to try and understand : Negotiable Instrument and Financial Asset Confusion started as both pages use Certificates of Deposits(CDs) as an example.So a CD is ...
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Keynesian Ethics

Reading Hayek and von Mises I found a bunch of strong arguments against interventionism beyond economics (philosophical and ethical aspects). The technical difference between Classical and Keynesian ...
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Do contemporary Marxist economists still deny the utility/value theory which underpins classical economics?

Do contemporary Marxist economists still apply the labor theory of value when analysing economic phenomena? Or do they e.g. acknowledge that value (and utility) is subjective as is common knowledge in ...
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How is inheritance classified in Adam Smiths profit/wage/rent classification?

It seems to me that inheritance can't be classified as profit or wage. So does it fulfill the definition of rent, or are there some economic activities that don't fit into this classification?
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Are corporations essential components of a free market economy?

There seems to exist a rarely-stated assumption that somehow corporations are an essential element of a free-market economy, and that they benefit a nation's economy. However, I wonder if this is ...
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In classical macroeconomics, why Labor supply responds to real wages and not money wages?

real wages = money wages/price(P). what are the assumptions here? why labor doesn't respond to money wages ?
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Cloth, Corn and Gold: James Stuart Mill example

I don't quite get James Stuart Mill's example of cloth, corn and gold in "Elements of Political Economy". He supposes that 20 yards of cloth takes the same amount of effort to make as 4 quarters of ...
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Understanding the current monetary context in terms of the classics?

I find the current monetary context unprecedented and baffling. On one hand there is no significant inflation, or even deflation. This is occurring against a backdrop of continued dollarization; many ...
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