Demand pull inflation (1940)

Outlined by English economist John Maynard Keynes (1883-1946), demand pull inflation describes a rise in prices triggered by an excess of demand for the available supply in the economy. Keynes raised an important concept of an inflationary gap, which replaced the notion that inflation was caused by a rise in the money supply. Also see: cost-push inflation, quantity theory

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Demand theory (19TH CENTURY- )

First raised as a fundamental principle of microeconomics by French economist Leon Walras (1834-1910), demand theory is the analysis of the relationship between the demand for goods or services and prices or incomes. Demand theory examines purchasing decisions of consumers and the subsequent impact on prices. The theory was subsequently developed by English economist Alfred Marshall (1842-1924), Italian Vilfredo

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Demographic transition (20TH CENTURY)

Demographic transition is a process by which underdeveloped countries experience a change in their birth and mortality rates because of a change in the economic development of the state. Over time and with rising influence, high birth and death rates are replaced by slower or declining birth rates. Also see: Malthusian population theory, secular stagnation theory

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Dependency theory (1957)

First formulated by American economist Paul Baran (1910-1964), dependency theory proposes that, where a developing country for the most part specializes in producing one good (usually agricultural) for export, an exploitative relationship develops in which its financial and economic resources are controlled by the local elite and the international economy. Also see: demographic transition Source: P Baran,

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Differential rent theory (19TH CENTURY)

Raised as an issue by Scottish economist JAMES ANDERSON (1739-1808) and English economist David Ricardo (1772-1823), differential rent theory asserts that rent arises because of the differences in the fertility or location of agricultural land. No rent is paid on the worst land and the total amount of rent increases as the margin of cultivation is

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Disequilibrium theory (20TH CENTURY)

Found in the work of English economist John Maynard Keynes (1883-1946), disequilibrium theory refers to a situation in which market equilibrium has not been reached or where there is a tendency for variable factors to change. Keynes believed that an economy has a natural inclination towards disequilibrium. Also see: equilibrium theory, general equilibrium theory, partial equilibrium theory, fundamental disequilibrium, classical macroeconomic model, law

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Distribution theory (18TH CENTURY- )

One of the fundamental components of modern economic theory, first examined by French economist ANNE-ROBERT JACQUES TURGOT (1727-1781), distribution theory is an explanation of how national income is distributed between different groups involved in the production process. Functional distribution of income is that earned by the owners of the various factors of production. The income earned

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Distributism (20TH CENTURY)

Theory of politics and economics of Anglo-French writer Hilaire Belloc (1870-1953). Since property is desirable, it should be distributed to all households, each of which should have enough on which to make a living. Distributism had more application to agricultural society, and was ill-adapted to an industrial one. Source: Rodney Barker, Political Ideas in Modern Britain (London, 1978)

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Diversification strategy

Diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge. Diversification is one of the four main growth strategies defined by Igor Ansoff in the Ansoff Matrix:[1] Ansoff pointed out that a diversification strategy stands apart from the other three strategies. Whereas,

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Dual decision hypothesis (1969)

A refinement by ROBERT W. CLOWER of English economist John Maynard Keynes’s (1883-1946) unemployment equilibrium, dual decision hypothesis relates to initial and revised demand and supply plans. If planned demand (demand based on prices which reflect full employment) varies from actual demand (based on a fall in income due to unemployment), the consumer and trader

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Dual economy theory (1953)

Attributed to J H BOEKE from study of postwar Indonesia, dual economy theory refers to an economy in which rich, capital-intensive modern sectors exist in the same model as comparatively poor, traditional, labor intensive sectors. Economists have deliberated over whether an economy should achieve economic growth through its technically advanced sectors or whether resources

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Dual labor market theory (20TH CENTURY)

There are two distinct economic systems. The first is what is normally understood as the economic system, the second is the patriarchal system of producing goods and services in the household. The subordination of women is rooted in the latter, but will have consequences throughout the ‘conventional’ economic system as well. Source: Maggie Humm,

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Duopoly theory (1838)

First posited by French economist Antoine Augustin Cournot (1801-1877), duopoly theory examines the interaction of two firms in a market: each firm’s output and prices are determined by the decisions of the other. Cournot’s model examined the reactions of the firms based on their output decisions, concluding that if one firm altered its output the other

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Economic liberalism

Economic liberalism refers to the maximum role of markets and competitive forces in an economy. The state’s role is limited to the establishment of the necessary framework in which markets can operate and to the provision of services which private enterprise cannot provide. Also see: laissez-faire Origins Adam Smith was an early advocate for economic liberalism

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Economic methodology

As exampled by the work of Nassau William Senior (1790-1864), and English economists John Stuart Mill (1806-1873) and John Maynard Keynes (1883-1946), economic methodology is the process by which economics is explained: the philosophy of science applied to economics. In the 19th century, British economists examined the premises of economic theory, arguing that the verification of economic theory was hazardous

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Economic theory of politics (19TH CENTURY- )

Economic theory of politics is an analytical model which assumes that politicians are vote maximizers and voters are utility maximizers. Each voter is assumed to support the political party that will provide him with the highest degree of utility when it is elected. Politicians, motivated by self-interest and the desire for public office, formulate

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Economic theory of the state (19TH CENTURY- )

Economic theory of the state is an analytical framework for examining the role of institutions, taxation and law in the creation of economic models. Source: S de Brunhoff, The State, Capital, and Economic Policy (London, 1978) Economics (/ɛkəˈnɒmɪks, iːkə-/)[1][2][3] is the social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services.[4] Economics focuses on

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Edmund Burke

Irish social and political philosopher and statesman. Although reared in the Enlightenment era, Burke was a severe critic of rationalist theories of natural law and social contract. Like David Hume, Edmund Burke believed that political and social organization evolved organically over history from a variety of political, cultural and social circumstances. In Burke’s view, current society is a

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Edward Chamberlin

Edward Chamberlin taught economics at Harvard (1937-1967) and made significant contributions to microeconomics, particularly on competition theory and consumer choice, and their connection to prices. One of the most influential economists of his time, Edward Chamberlin coined the term “product differentiation” to describe how a supplier may be able to charge a greater amount

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Efficient market hypothesis (20TH CENTURY)

Dating back to work on the random walk hypothesis by French economist Louis Bachelier (1870-1946), efficient market hypothesis asserts that stock market prices are the best available estimates of the real value of shares since the market has taken account of all available information on an individual stock. Also see: rational expectations theory, adaptive expectations Source: H Roberts, ‘Stock Market

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