Changes

=== The Great Depression ===

=== The Great Depression ===

[[The Great Depression]] of 1929 was a powerful influence behind the development of macroeconomics, since it highlighted the major flaws in applying [[microeconomics|microeconomic]] theory to the national economy. According to microeconomic, or "market-clearing" theory, the large amount of unemployment following the Great Depression should have been adjusted by the "invisible hand" of the markets, whereby workers revised their wage expectations downwards to the point where firms were willing to employ more workers. However, due to the unemployment and poverty, the demand for goods and services dropped, so firms did not require workers. In addition to this, workers were unwilling to accept substantially lower wages to do the same jobs as before, preventing the wage rate dropping to an appropriate level.  

[[The Great Depression]] of 1929 was a powerful influence behind the development of macroeconomics, since it highlighted the major flaws in applying [[microeconomics|microeconomic]] theory to the national economy. According to microeconomic, or "market-clearing" theory, the large amount of unemployment following the Great Depression should have been adjusted by the "invisible hand" of the markets, whereby workers revised their wage expectations downwards to the point where firms were willing to employ more workers. However, due to the unemployment and poverty, the demand for goods and services dropped, so firms did not require workers. In addition to this, workers were unwilling to accept substantially lower wages to do the same jobs as before, preventing the wage rate dropping to an appropriate level.  

In response to this situation, the British economist [[John Maynard Keynes]] wrote ''The General Theory of Employment, Interest and Money'' in which he outlined the limitations of Microeconomics and put forward many founding macroeconomic principals such as aggregate demand <ref>http://www.economyprofessor.com/economictheories/general-theory-of-employment-interest-and-money.php</ref>, and thus can be considered the "father" of Macroeconomics. Since then many of Keynes' original theories have been subject to intense scrutiny and critique, notably by [[Monetary theory|monetarists]] such as [[Milton Friedman]] who claim government intervention to correct market failure is inefficient, and private firms motivated by [[profits]] and price competitiveness are far better at ironing out market failures.

In response to this situation, the British economist [[John Maynard Keynes]] wrote ''The General Theory of Employment, Interest and Money'' in which he outlined the limitations of Microeconomics and put forward many founding macroeconomic principals such as aggregate demand,<ref>http://www.economyprofessor.com/economictheories/general-theory-of-employment-interest-and-money.php</ref> and thus can be considered the "father" of Macroeconomics. Since then many of Keynes' original theories have been subject to intense scrutiny and critique, notably by [[Monetary theory|monetarists]] such as [[Milton Friedman]] who claim government intervention to correct market failure is inefficient, and private firms motivated by [[profits]] and price competitiveness are far better at ironing out market failures.

== Government Policy ==

== Government Policy ==

* Roncaglia, Alessandro. ''The Wealth of Ideas: A History of Economic Thought'' (2006) [http://www.amazon.com/Wealth-Ideas-History-Economic-Thought/dp/0521691877/ref=pd_bbs_sr_4/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-4 excerpt and text search]

* Roncaglia, Alessandro. ''The Wealth of Ideas: A History of Economic Thought'' (2006) [http://www.amazon.com/Wealth-Ideas-History-Economic-Thought/dp/0521691877/ref=pd_bbs_sr_4/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-4 excerpt and text search]

*  Samuels, Warren, John Davis, and Jeff Biddle, eds. ''A Companion to the History of Economic Thought.''  (2003) [http://www.amazon.com/Companion-Blackwell-Companions-Contemporary-Economics/dp/1405134593/ref=pd_bbs_sr_1/103-4827826-5463040?ie=UTF8&s=books&qid=1190729175&sr=8-1 excerpt and text search]

*  Samuels, Warren, John Davis, and Jeff Biddle, eds. ''A Companion to the History of Economic Thought.''  (2003) [http://www.amazon.com/Companion-Blackwell-Companions-Contemporary-Economics/dp/1405134593/ref=pd_bbs_sr_1/103-4827826-5463040?ie=UTF8&s=books&qid=1190729175&sr=8-1 excerpt and text search]

* Samuels, Warren J. ''Histories of Economic Thought'' (2003) [[http://www.amazon.com/Histories-Economic-Thought-Research-Methodology/dp/0762309970/ref=sr_1_16/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-16 excerpt and text search]

* Samuels, Warren J. ''Histories of Economic Thought'' (2003) [http://www.amazon.com/Histories-Economic-Thought-Research-Methodology/dp/0762309970/ref=sr_1_16/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-16 excerpt and text search]

* Snowdon, Brian ''The Power of Ideas - an interview with Joel Mokyr'' World Economics July-September 2007 [www.world-economics-journal.com]   

* Snowdon, Brian ''The Power of Ideas - an interview with Joel Mokyr'' World Economics July–September 2007 [www.world-economics-journal.com]   

* [http://www.chass.utoronto.ca/~munro5/schump.htm#N_1_ Schumpeter, Joseph A., ''History of Economic Analysis'', (1954, 1996)] [http://www.amazon.com/History-Economic-Analysis-New-Introduction/dp/0195105591/ref=sr_1_15/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-15 excerpt and online search]

* [http://www.chass.utoronto.ca/~munro5/schump.htm#N_1_ Schumpeter, Joseph A., ''History of Economic Analysis'', (1954, 1996)] [http://www.amazon.com/History-Economic-Analysis-New-Introduction/dp/0195105591/ref=sr_1_15/103-4827826-5463040?ie=UTF8&s=books&qid=1190648431&sr=8-15 excerpt and online search]

* Wahid, Abu N. M. ''Frontiers of Economics: Nobel Laureates of the Twentieth Century'' 2002 [http://www.questia.com/PM.qst?a=o&d=107166560 online edition]

* Wahid, Abu N. M. ''Frontiers of Economics: Nobel Laureates of the Twentieth Century'' 2002 [http://www.questia.com/PM.qst?a=o&d=107166560 online edition]

==References==

==References==

==See also==

==See also==

* [[Ludwig von Mises]]

* [[Ludwig von Mises]]

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