ECON 205 Lecture (3.31.2008)

ECON 205 Lecture (3.31.2008) - ECON-205 Lecture (3-31-2008)...

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ECON-205 Lecture (3-31-2008) REVIEW: Chapter 11: Classical Economics - Adam Smith, Ricardo, Malthus, Mills o Capitalist system o Assumptions - Later on, John Say joined the club o Say’s Law: Supply creates its own demand. They look from the supply side, NOT from the demand side. In capitalism, there are two “globes”: firms/businesses and consumer/households. Supply is on the firms/business globe. Demand is on the consumer/households globe. Say said that the economy would supply goods and services, which the consumers would buy because consumers have wages and salaries. According to John Say, there would be no unemployment. This is not true because people save money. This developed the money market, which came with the following: s = f (Income) saving as function of income… I = f (Income) investment as function of income. - Assumptions of the Classical Model (Page 263) o Believed that full employment is a normal way of life under capitalism o Wages and prices are flexible
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This note was uploaded on 09/26/2009 for the course ECON 205 taught by Professor Kamrany during the Spring '07 term at USC.

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ECON 205 Lecture (3.31.2008) - ECON-205 Lecture (3-31-2008)...

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