what economic theory promotes taking measures to encourage

Economical Theory and the Us Economic system

Oft Asked Questions

What is an economic theory?

An economic theory is used to explicate and predict the working of an economy to help drive changes to economical policy and behaviors. Economic theories are based on models developed by economists looking to explain recurring patterns and relationships. These theories connect different economical variables to one another to show how they're related.
What is Keynesian economical theory?

Keynesian economics is a theory that says the government should increase demand to boost growth. Keynesians believe consumer need is the main driving force in an economy. Its main tools are government spending on infrastructure, unemployment benefits, and education. A drawback is that Keynesian policies could increment inflation.
What is the economic theory of mercantilism?

Mercantilism is an economic theory that advocates government regulation of international trade to generate wealth and strengthen national ability. Merchants and the government work together to reduce the trade deficit and create a surplus. Mercantilism funds corporate, military, and national growth and advocates trade policies that protect domestic industries.
What is the economic theory behind socialism?

The economical theory behind socialism—an economic system in which citizens share buying of the various factors of product—is community or solidarity. Socialists believe people should value the liberty and well-being of others equally much as their own, and that the economic arrangement should support that goal.
What is economic development theory?

Economic development theory aims to answer the question "why are some countries developed, merely others less developed?" It focuses on the fiscal, social, and economic conditions in developing countries, such as health, instruction, and employment, to better empathise how they could be improved.
What was Karl Marx's economic theory?

Karl Marx's economic theory critiques commercialism and how it is unjust because there is a struggle betwixt social classes when it comes to labor, production, and economic development. His theory suggests that communism may be a more than just economic organization.

Key Terms

Nationalism

Nationalism is an ideology by people who believe their nation is superior to all others. This sense of superiority ofttimes has its roots in a shared ethnicity.
Economies of Calibration

Economies of calibration are cost reductions that occur when companies increase production. The fixed costs, like administration, are spread over more units of production. Sometimes, a visitor that enjoys economies of scale can negotiate to lower its variable costs, as well.
Law of Need

The police of demand states that all other things existence equal, the quantity bought of a good or service is a function of price.
Laffer Curve

The Laffer Curve is an economic theory that describes the potential impacts of tax cuts on government spending, revenue, and long-term growth. Economist Arthur Laffer developed information technology in 1974. He argued that tax cuts take 2 effects on the federal budget: arithmetic and economical.
Imperialism

The give-and-take "imperialism" comes from the Latin term imperium which ways "to command." Imperialism is the policy or human action of extending a country's power into other territories or gaining control over another country's politics or economics.
Late-Stage Commercialism

Late-stage commercialism describes the unrealistic perspectives of the wealthiest 1%. In the same vein, it highlights how the center form is largely oblivious to the struggles of the poor.
Inelastic Need

In economics, inelastic demand occurs when the demand for a production doesn't change as much every bit the cost. For example, if the price increases 20%, but the demand only goes down by one%, the demand for that product is said to be inelastic.
Monetarism

Monetarism is an economic theory that says the coin supply is the most important driver of economical growth. As the coin supply increases, people demand more. Factories produce more, creating new jobs.
Vertical Integration

Businesses are e'er looking for methods to reduce costs and command the quality of the products and services they provide. Vertical integration is when a company is able to create a competitive advantage by integrating different stages of its production process and supply chain into its business.
Supply-Side Economics

Supply-side economics is the theory that says increased product drives economical growth. The factors of product are capital, labor, entrepreneurship, and land.
Comparative Reward

Comparative advantage is when a country produces a good or service for a lower opportunity cost than other countries. The benefits of buying the proficient or service outweigh the disadvantages. The country may not be the best at producing something, only the good or service has a low opportunity price for other countries to import.

Illustration of 5 characteristics of a command economy

What Is a Control Economy?

Wall on Mexico border

Nationalism: Definition, Examples, and History

Comparative Advantage vs. Competitive Advantage Competitive Advantage: Country, business, or individual provides better value than its competitors Comparative Advantage: Country produces a good or service for a lower opportunity cost than other countries

What Is Comparative Advantage?

Franklin Delano Roosevelt

How FDR Beat the Great Depression

5 traits of a traditional economy: centers around family or tribe, exists in a hunter-gatherer and nomadic society, trade relies heavily on barter, produce only what you need (surplus or leftovers are rare), they eventually evolve to form some form of currency for trade

What Is a Traditional Economic system?

Ronald Reagan giving a speech

How President Reagan Concluded the 1980s Recession

Economies of Scale

What Are Economies of Scale?

US delegates attending the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference, in Bretton Woods, New Hampshire

How a 1944 Agreement Created a New International Monetary Organisation

What Is Competitive Reward?

Woman shopping for produce at grocery store

What Are Government Subsidies?

Consumer browsing in a grocery store

What Is the Income Event?

Women shopping

Vertical Integration Occurs When a Business Owns Its Supply Chain

keynesian economics vs. classic economics

How Keynesian Economics Works

Characteristics of a Mixed Economy

Shipping containers on a container ship at sea

President Donald Trump

President Donald Trump's Economical Plans and Policies

Tax cut

What Is the Laffer Curve?

What Is Late Stage Capitalism and Why Is It Trending Today?

shoppers-homeless trickledown

Does Trickle-Down Economic science Work?

Supply side economics

Decide for Yourself Whether Supply Side Economic science Works

Why America Is Not Really a Free-Marketplace Economy

An illustration with the five determinants of demand with examples and formula.

5 Determinants of Demand With Examples and Formula

how the law of demand works

The Law of Demand Explained Using Examples in the U.S. Economy

Politicians talking in government building

Nobel Prize-winning economist Milton Friedman attends a 1986 Beverly Hills charity dinner in his honor. Duringthe 1980s, Friedman's monetarist policies ruled.