Schools of Economics

Classical Economics: 1776 to the 1930s, 1980s to the present

Also known as:	1.________2._________
	3.________4._________
Key historic figures	1.________2._________
	3.________4._________
	5.________6._________
Fundamental Premise of Classical Economics	Competition is
Competition will cause businesses to always ____________ products in order to win the market.
Competition will also cause businesses to _________ prices in order to win the market.
This trend is known as the:
Consumers will get products that are __________ and __________.
The inefficient companies will:
If new companies enter the market, they must be more_________ in order to compete.
Jean Baptiste Say built on Smith’s analysis and gave us the theory that is known today as:
If suppliers overproduce, they can correct the surplus by cutting ­­­­­_________ and lowering _________.
The economy will re-balance because wages are _________ but so are _______.  Real wealth balances.
If suppliers under-produce, they can correct the shortage by increasing ________ and raising _______.
The economy will re-balance because wages are ______ __but so are _________. Real wealth balances.
The summary is often stated as “Supply creates its own ________.”
Government in this Classical world has a critical role. Government must make sure that _________ occurs.
Government must stop ____________ or _________, which inhibit competition.
Classical theorists also want to always lower _______ in order to reduce government interference
In the Long Run, the Economy will __________ near efficient Full Production.

Keynesian Economics: 1930’s to the present

Also known as:
Key historic figures:	1._________2._________
Fundamental Premise of Keynesian Economics	Competition is Good, But ____________
In the Short Run, Smith’s Invisible Hand will always have the presence of companies that are:
Say’s Law is generally a myth because businesses can’t really lower prices at will.  This is known as:
Consumers will also be paid by businesses, but will always __________ some of the income.
This will cause a constant __________ of wealth.
Because of these problems, businesses will be under constant pressure to _______  jobs and production.
Prices can also increase easily, but not decrease.  This is known as the ___________ Effect.
Markets can reach efficiency and full employment, but Keynesians assume that they will soon become:
­­­­­_______________ will probably become the economic norm.
Government must now step in and correct the missing ________  ___________.
Congress will represent the interests of the people best and will therefore use the tools of _____ and _______.
Congress can’t wait for the potential Long Run Balance, because ___________ need help.
Keynes summarized this as “In the Long Run we are all __________”
When recessions occur, Congress should ______ taxes, _________ government spending.
When inflation occurs, Congress should _______ taxes, _________ government spending.
Congress can also create programs that keep the economy from crashing so much.  These are known as:
Examples of these programs are:

Monetary School Economics: (1913), 1970s to the present

Also known as:	1.
	2.
Current US Chairman of the system:
Fundamental Premise of the Monetary School	Competition is Good, but needs ____ _______.
The average recession in the US will last about:
We only “know” a recession has started after at least _________ months have passed.
Even if Congress agrees on a policy, it can take many more __________ to enact.
By the time the policy comes into force, the recession may have already:
Congress may be able to cut taxes during recessions, but they will never have the will to ________ taxes to fight inflation.
Therefore, the best way to correct economic flaws is to have the ________ ________ act quickly.
In addition, this group can focus on stable __________ that helps control demand pull inflation.
The group can always also focus on long run growth with realistic growth __________.
This means that the government, through this non-political and independent agency can control national growth by manipulating __________ _______.
This will keep _____ under control and healthy for businesses and other borrowers.
When recessions threaten, ________ interest rates on borrowing.
When inflation threatens, _________ interest rates on borrowing.