G-24: Salinas, Christel Jane A.

Assignment in AP

Grade 9 – Lewis Sir Gliane

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ECONOMISTS ECONOMICS PRINCIPLES

1. Adam Smith Supply and demand
The economist Adam Smith believed prices and
profits depended on supply- the amount of goods
and service available- and demand- the desire for
those goods. As demand goes up, supply goes
down.
Adam Smith opposed mercantilism and
monopolies. He believed that the law of supply
and demand and the law of competition would
regulate a free market.
Adam Smith is often touted as the world's first
free-market capitalist. The ideas that underpin
the school of thought that became known as
classical economics.

2. Karl Marx Karl Marx's primary contribution to economics

was a new framework that described economics
as a struggle for power between different classes.
Marx suggested that the means of production
would ultimately be held not by private industry
but by the people or the government. This
thinking still resonates today, but different
governments have vastly different interpretations
of how Marxism is to be used to inform policy.

Marx predicted the fall of capitalism and

movement of society toward communism, in
which “the people” (that is, the workers) own the
means of production and thus have no need to
exploit labor for profit. Clearly, Marx's thinking
had a tremendous impact on many societies,
particularly on the USSR (Union of Soviet Socialist
Republics) in the twentieth century.
3. John Maynard Keynes Prior to Keynes, the consensus was that the
natural balance of demand and supply in the
economy would keep the economy in
equilibrium, and the Government need not
manage demand. This consensus was called into
question when in the Great Depression there was
a period of time where there appeared to be
radically low demand in the economy.

John identified two main risks to enacting a policy

of demand management:

1. The Government not knowing what the

balanced positon in the demand and
supply in the economy should be and
therefore spending potentially too little
or too much money
 2. Deficit financing to facilitate demand
management causing a deterioration in
the Government’s fiscal position and
reducing the ability of the Government to
borrow

4. Thomas Malthus The Malthusian Theory of Population is a theory

of exponential population growth and arithmetic
food supply growth. Thomas Robert Malthus, an
English cleric, and scholar published this theory in
his 1798 writings, An Essay on the Principle of
Population.

He believed that through preventative checks

and positive checks, the population would be
controlled to balance the food supply with the
population level. These checks would lead to the
Malthusian catastrophe.

5. David Ricardo He concludes that land rent grows as population

increases.

Free trade between two or more countries can

be mutually beneficial, even when one country
has an absolute advantage over the other
countries in all areas of production.
6. Paul Samuelson Samuelson contributed to many areas of
economic theory through powerful mathematical
techniques that he employed essentially as
puzzle-solving devices. His Foundations of
Economic Analysis (1947) provides the basic
theme of his work, with the universal nature of
consumer behaviour seen as the key to economic
theory. Samuelson studied such diverse fields as
the dynamics and stability of economic systems,
the incorporation of the theory of international
trade into that of general economic equilibrium,
the analysis of public
goods, capital theory, welfare economics, and
public expenditure. Of particular influence has
been his mathematical formulation of the
interaction of multiplier and accelerator effects
and, in consumption analysis, his development of
the theory of revealed preference.

7. Milton Friedman Milton Friedman began his teaching career at the

University of Chicago isolated intellectually. He
defended the ideas that competitive markets
work efficiently to allocate resources and that
central banks are responsible for inflation. By the
1980s, these ideas had become commonplace.
Friedman was one of the great intellectuals of the
20th century because of his major influence on
how a broad public understood the Depression,
the Fed's stop-go monetary policy of the 1970s,
flexible exchange rates, and the ability of market
forces to advance individual welfare.
8. Physiocrats According to one late-19th century historian, the
physiocrats (who called themselves the
"économistes") created "the first strictly scientific
system of economics".

Physiocracy was a theory of wealth. The

physiocrats, led by Quesnay, believed that the
wealth of nations was derived solely from the
value of agriculture.
The physiocrats, like many other thinkers of the
eighteenth century, subscribed to the idea of a
"natural order". They showed that unchanging
laws governed all economic processes.
Consequently, it is generally thought that the
physiocrats were opposed to government
intervention. The dead hand of the state would
only corrupt the natural evolution of the
economy. Jacob Viner, the Canadian economist,
referred to the physiocrats as one of the “pioneer
systematic exponents” of laissez-faire (alongside
Adam Smith).