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Western Economic Theories and Schools. Group Members: Jenny Kelly Etta Eutene. Content. Introduction Jenny Basic Economic Concepts Jenny Development Kelly Etta Conclusion Eutene.

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western economic theories and schools

Western Economic Theories and Schools

Group Members: Jenny Kelly Etta Eutene

  • Introduction Jenny
  • Basic Economic Concepts Jenny
  • Development Kelly Etta
  • Conclusion Eutene
i basic economic concepts
I. Basic Economic Concepts
  • Definitions of economics
  • 3 basic economic questions
  • Goals of economic theories
definitions of economics
Definitions of Economics

2 Principles:

1. Scarcity

  • - the limited nature of society’s resources.

2. Opportunity cost

  • - whatever must be given up to get the item
definitions of economics1
Definitions of Economics
  • Lionel Robbins (1898-1984, LSE) defined economics in 1932:
  • “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”
three basic economic questions
Three Basic Economic Questions
  • What to produce
  • How to produce
  • For whom to produce.
goals of economic theory
Goals of Economic Theory
  • Help society find better answers to the 3 basic questions.
  • Predict how changes in government policy or market institutions will affect economic outcomes.
2 the development of economics
2.The Development of Economics
  • (1). Mercantilism (重商主义)
  • (2). Classical Economics (古典经济学)
  • (3). Neo-Classical Economics (新古典经济学)
  • (4). Contemporary economics (当代经济学)
1. Mercantilism (重商主义)

A policy to obtain monetary wealth

1 mercantilism
(1). Mercantilism (重商主义)


Economic matter: The rise and development of commercial capital

Social matter: The great geographical discovery

15th~17th century

1 mercantilism1
(1). Mercantilism (重商主义)
  • Background
    • Political matter: Centralized country started

Need more currency

1 mercantilism2
(1). Mercantilism (重商主义)


  • Noble metal (money) is the only standard to measure wealth
  • The more accumulation of gold and silver means more powerful
  • Prohibition of exporting gold and silver, while input increase
  • Government should intervene in economics
  • International trade is a "zero sum game"零和博弈


Development stages

  • Early mercantilism(15th~the middle of the 16th century)

buy less in foreign trade

prohibit the output of currency

control currency movements

  • Late mercantilism (The second half of the 16th Century to 17th Century)

sell more

allow the output of currency

protective tariffs (保护关税)

  • --Thomas Monn 托马斯·孟
  • Output value of commodity must be larger than the input value to increase the currency input
background viewpoint representatives

(2).Classical economics





2 classical economics
(2). Classical economics

about 1750-1875

  • Background
    • Workshop handicraft industry(手工业) has gradually become the main form
    • The feudal system(封建制度) has seriously hindered the capitalism
2 classical economics1
(2). Classical economics
  • Viewpoints
  • “An invisible hand”—market(看不见的手)
  • Laissez-faire principle(自由放任), no government intervention
  • National wealth growth conditions
2 classical economics2
(2). Classical economics
  • Representatives
  • --Adam Smith(亚当.斯密)

<The Wealth of Nations>

The economic system to put laissez-faire thought as the center, and the research from the circulation field transfer to the production field

  • --David Ricardo(大卫.李嘉图)

<The principles of political economy and taxation>《政治经济学及赋税原理》 

Success in the labor theory of value and distribution of the enrichment and perfection of the theory.

3 newclassical economics

(3).NewClassical Economics (新古典经济学)


The refinement of Neo-Classical Economics

3 newclassical economics1
(3).NewClassical Economics (新古典经济学)


  • Background
  • Inheritance of Classical Economics and economic liberalism(经济自由主义)
  • The beginning of the marginal revolution (边际革命)
  • After Industrial Revolution, the unfair distribution of wealth led to social discontent.
3 newclassical economics2
(3).NewClassical Economics (新古典经济学)
  • Viewpoints
  • Market economy can solve the problem of unemployment, slump, while the stable policy of government have no effect on it.
  • The dilemma of unemployment and inflation not only exist in the long term, but also in the short term.
3 newclassical economics3
(3).NewClassical Economics (新古典经济学)
  • Representatives

——Alfred Marshall(阿尔弗雷德·马歇尔)

“Principle of Economics”《经济学原理》

  • The theory of supply and demand(供求理论)
  • The theory of production cost (生产费用理论)
  • The theory of marginal utility(边际效用理论)
  • The theory of marginal productivity (边际生产力理论)
4 contemporary economics
(4).Contemporary economics (当代经济学)

since 1930s

  • Background

—The putting forward of Keynesianism marks the birth of modern economics

— The establishment and development of Macroeconomics

4 contemporary economics1
(4).Contemporary economics (当代经济学)
  • Stages of development
  • The Keynes revolution (凯恩斯革命)

—putting forward the modern macroeconomics system, in which national revenue decision is the theory center and government intervention the policy adjustment.

  • The period of macroeconomics
  • The revival of Laissez-faire thought (自由放任)
3 conclusion
  • Basic economic concepts


3 basic questions

The goals of economic theory



Mercantilism Thomas Men

Classical Economics <The Wealth of Nations>

New classical economics Alfred Marshall

Contemporary Economics The Keynes revolution


The Nobel Prize for Economics

Not much in common

Even conflict

Fama People’s rational calculation

Shiller Psychological factors