Economics : Classical Economics And Keynesian Economics

1665 Words Aug 1st, 2014 7 Pages
As interesting as the subject of economics is, it’s a subject that isn’t easily understood. In order to grasp the subject you have to really understand the concepts. And it’s not like riding a bike, once you know how to do it you will always have it engraved in your head. I will attempt to highlight the key factors of the two theories of economics: classical economics and Keynesian economics.
Since Classical Economics is considered to be the first school of economics. I will start to explain this concept first. In the 18th and 19th centuries, there was a group of economists that worked together to develop theories to explain how market to market relationship work between each other. The most important contributor to the classical school of economics was the great economist Adam smith, whom is considered the founder. Adam Smith stated in an excerpt from ‘An Inquiry into The Nature and Causes of The Wealth of Nations’. “By pursing his own interest, he (man) frequently promotes that (good) of the society more effectively than when he really intends to promote it. I (Adam Smith) have never known much good done by those who affected to trade for the public good.” You will understand that from those thoughts Adam Smith created the foundation of classical economics.
It is key to point out the basic structure or assumptions that form classical economics. The three theories that sticks out to me are: Say’s Law: Say’s law suggests that aggregate production in an economy generates…

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