MR - Fisher 1 Flashcards
(20 cards)
so supply and demand are inherently mathematical
sceptical about best outcome for society (talking about equitable outcome)
Critique of classical authors for their omission of numerical analysis – Specifically Ricardo’s labour theory of value
- Can also mention Jevons also introduced the unit of utils
PLEASURE AND PAIN
pleasure gains froms consuming goods from the wages earned
sceptical about best outcome for society (talking about equitable outcome)
dont mention victorian era stuff
Hierarchy has low order goods on bottom!!!
“Spontaneous order” –> key social and economy institutions arose through unplanned interactions between individuals who aimed to satisfy their needs –> opposed to state intervention –> interferes with spontaneous order mechanism –> yield more development
Markets –> unregulated –> work best when individuals pursue self-interest –> danger of paternalistic state –> interfere in markets –> distort market signals –> weakens spontaneous order mechanism
Only good state intervention: focus on fiscal matters and bureaucracy: maintain social order
Dont mention Victorian era stuff
USE WORD SATISFACTION
“Spontaneous order” –> key social and economy institutions arose through unplanned interactions between individuals who aimed to satisfy their needs –> opposed to state intervention –> interferes with spontaneous order mechanism –> yield more development
Markets –> unregulated –> work best when individuals pursue self-interest –> danger of paternalistic state –> interfere in markets –> distort market signals –> weakens spontaneous order mechanism
Only good state intervention: focus on fiscal matters and bureaucracy: maintain social order
dont mention victorian era stuff
**Dont mention victorian era stuff **
Auction-like process
- auctioneer anounces prices and and then collects bids from buyers and sellers
- then creates a new set of prices and repeats process
- each set of prices are set to reduce the excess demands
- trial and error –> eventually reach equilibrium
- No actual trading occurs till we are at equilibrium
maybe dont mention interdependent markets assump
Walras belonged to the Lausanne school of thought – believed in using mathematical methods but did include some elements of logic
** (Even out of equilibrium) At the aggregate level and for each individual we assume that there cannot be excess demand/supply - only for industries can there be an excess/supply/demand - this is due to the Walras Law**
highlights the “Two Marshalls”
- abstract theorist through using mathematics
- practical observer (realist) through applying to real life
- Shows that practical observer take priority when clash when we burn 3 if 4 doesnt hold
This is how he explains the existence of the market demand curve as this highlights the maximum WTP buy the individuals
Based on this idea, givt can use tax and subsisides used to improve resource allocation -
link marx different economic system - Marshall argues against radical economic change –> i.e., poverty
This is likely to occur in special markets as general markets are characterized by competitive market forces
Increasing IRS - -> occurs in long-run period as firms are able to increase size of capital stock and plant
Mention that investment is speculative - so when confidence initially drops –> results in large drop in confidence
Significant as investment in skills and technology is a key driver of growth for Marshall (tech reduces costs by increasing productivity
Capitalists / owners of the means of production have the incentive to reinvest whereas workers ownigng the means of production dont necessarily
Economic chivalry –> Marx argued that wages pushed to subsistence –> Marshall argues m,echanisms to ensure living standards of working class arent pushed to subsistence
could link to Marx saying that capitalism –> wages of workers subsistence –> but no Marshall sees positive
could say after critiquing Marx that he even advocates for monopolies in specific industries…
PUBLIC OWNERSHIP IS UNPRODUCTIVE!!!!
Wicksell argues there is a monetary illusion. –> because if all exchanges were not done through money but in “real” terms there would be no difference between the real and nominal interest rate
comp maximises output but there is not determinate outcome for the distribution of income, hence could not be a equal distribution
as people with high cards come out on top, free markets can just worsen inequality
Financial panics in early 1900’s led to the creation of the federal reserve system
Can argue that his mathematical/physics background is highlighted for him as he used graphs and graphical illustrations which you would expect to see in a physics textbook an example is his depiction of his quantity theory of money
Financial panics in early 1900’s led to the creation of the federal reserve system
Once people realise their real purchasing power through accounting for inflation, then they can assess the true value of the contract, such that contracts will be adjusted. Contracts will now reflect the true value, such that people will be indifferent between contracts if real returns are the same.
Great depression of 1929 has occurred!!
This reasoning links with his recent observation of the great depression
also link that preventing bank runs can prevent financial crisis and in turn economic crisis
if we did have all the complete knowledge the the problem faced by the central planner is logical, however, this is not the case in reality and we do not have the means to solve this logical problem
no single mind would be able to solve the economic problem as it is too difficult to compute
Argues for a free exchange economy and that prices is the mechanism which allows the allocation of resources in the economy. Prices convery this deispersed knowledge and [rovide information.
Europe
After WW1 Germany had to pay reparations a lot of money printed Germany has hyperinflation
U.S
Europe
After WW1 Germany had to pay reparations a lot of money printed Germany has hyperinflation
U.S
