John Maynard Keynes (1883-1946) was interested in the level of national income and the volume of employment rather than in the equilibrium of the firm or the allocation of resources.
He was still concerned with the problem of demand and supply, but “demand” in the Keynesian model means the total level of effective demand in the economy, while “supply” means the country’s capacity to produce. When effective demand falls short of productive capacity, the result is unemployment and depression; conversely, when demand exceeds the capacity to produce, the result is inflation.
MORE IDEAS FROM Economics - Keynesian economics
Positive Economics is a stream of economics that focuses on the description, quantification, and explanation of the developments in economics, the expectations, and the associated phenomena. It heavily relies on objective data analysis, relevant facts, and associated figures.
Adam Smith was an 18th-century Scottish economist, philosopher, and author. He is considered the father of modern economics.
Over 50 years ago, economist William Baumol noted that economics was a theory of the economy that left no place for entrepreneurship. Economic models, simply put, were “entrepreneur-less.” Economics is no better today; in fact, it’s arguably worse. It focuses on faceless economic forces in formalized models. Modern economics is to a great extent a theory of equilibrium and efficient outcomes. But it is not a theory of the market.
Modern economics is a theory of the economy that leaves no place for the entrepreneur. So where should entrepreneurs turn to improve their understanding? The Austrian school of economics might be the answer.
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