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Chapter 1: Q 15. (page 25)

How did John Maynard Keynes define economics?

Short Answer

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John Maynard Keynes defines economics as a method of thinking rather than a doctrine.

Step by step solution

01

Step 1. Definition of Economics

Economics is the study of how humans make choices under conditions of scarcity. It deals with the consumption and production of goods and services. It also includes the knowledge of the transfer of wealth.

02

Step 2. The definition of economics according to John Meynard Keynes.

John Meynard Keynes stated economics as a method of thinking rather than a doctrine that draws conclusions for individuals. He said that economics teaches us how to think, and not what to think.

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Most popular questions from this chapter

The main reason that some nations have higher average living standards than others is that

A. the richer nations have exploited the poorer ones.

B. the central banks of some nations have created more money.

C. some nations have stronger laws protecting worker rights.

D. some nations have higher levels of productivity.

Explain whether each of the following government activities is motivated by concern about equality or a concern about efficiency. In the case of efficiency discuss the type of market failure involved.

  1. Regulating cable TV prices
  2. Providing some poor people with vouchers that can be used to buy food
  3. Prohibiting smoking in public places
  4. Breaking up standard oil (which once owned 90 percent of all U.S. oil refineries) into several smaller companies
  5. Imposing higher personal income tax rate on people with higher incomes.
  6. Enacting laws against driving while intoxicated

You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs?

What are the two main causes of market failure? Give an example of each.

How are inflation and unemployment related in the short run?
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