ECN 004 – 9-8-2021 ( Discussion Quiz 2-MAIN SCHOOLS OF THOUGHT ON HOW THE MACROECONOMY FUNCTIONS)

Discuss Development economics as a multi dimensional concept.
Development economics as a multi dimensional concept implies that’s is complex.you could intricate themes, characters,plots and symbols or you could even call a person multi dimensional if she had a particularly complicated personality development economics is a multi dimensional Concept the process involves major changes in social structure,popular attitude and national institution as well as acceleration of economics growth, reduction of inequality and eradication of absolute poverty.
Economics development is considered a multi dimensional because it focus on the income of the people and on the improvement of the living standards of the people.
Multi dimensional analysis of development economics allows economic data from various view points.this enable them to spot trends or exceptions Into data.
Development economics has a greater scope that’s why it is multi dimensional because it’s concerned with the efficient allocation of existing scarce products resources and with their sustained growth overtime.It deals with the economic, social, political and institutional mechanism both political and private necessary for rapid and large-scale improvement in all levels of the economy of the people.
It’s multi dimensional concerned with the economic, cultural and political requirements for affecting and institutional transformation of enteir societies in a manner that will most efficiently bring the friuts of economic progress to the broadest segment of the population.
It’s multi dimensional aspect help to understand development economics in order to improve the material lives of the majority of the global population.
What Do You Understand by development and it’s processes
Development means different things to different people.
What I understand is that
Development means” improvement in a country’s economics and social condition” more specifically it refers to improvement in way of managing an area’s natural and human resources in order to create wealth and improve people’s lives.
Processes of Development
PROCESSES OF DEVELOPMENT
The expression “processes of development” is used to describe all the processes and mechanisms that contribute to differentiating-organizing a living being from the start of life onwards. The result of these processes for any given organism at any given time corresponds to its “level of development.”

The different phenomena involved in development must be considered in terms of the somatic level (morphological growth, development of physiological functions), behavioral level and psychic level, the level of psychogenesis. The work of genetic (or developmental ) psychology is defined in terms of this last level, but an essential aspect of psychoanalytic theory and clinical practice is also situated at this level.

Freud’s interest in the processes of development appeared in his first scientific works, well before he created psychoanalysis. In an attempt to establish the pathways of nerve conduction he tried to grasp their development through comparative anatomical studies of fetuses. From the very beginning he thus posited a principle that he was to use in creating psychoanalysis itself: in order to understand a complex structure in an adult, the sovereign method is to grasp the successive stages in its construction. Moreover, as an ardent Darwinian, he straightaway and ever after considered time as an essential part of the data.

The reason he became so excited by Josef Breuer’s account of the case of Anna O. in 1885 was because he saw it as proof that when subjects themselves go back in time through their own history, this has a curative effect. The cases reported in Studies on Hysteria (1895d) are all built around this principle, as is the accompanying theoretical writing.

He thought he had found the psychopathological equivalent of the source of the Nile: every case of psychoneurosis, particularly hysteria, can be considered as a progressively constituted formation based on a traumatic incident in childhood, an incident that is always of a sexual nature and whose effect is deferred, not appearing until the subject reaches puberty. He nevertheless came to doubt that “seduction” of girls by their fathers was as frequent as the hysterics he treated would have had him believe. After a brief period of discouragement (“they are only fantasies”), he effected a remarkable recovery (“they are fantasies” that the patient places in the past and which must be analyzed). The analysis of the case of Little Hans in 1905 (the text was not published until 1909) offered him a live study of the development of such fantasies in the child, as well as their pathogenic effects.

This developmental point of view was to continue to have major importance in Freudian thought. He thus wrote his Formulations on the Two Principles of Mental Functioning (1911b) in the imperfect tense, as if he were telling a story. In 1913 he wrote that the psychoanalytic approach “consists in relating a psychic formation to others preceding it in time and from which it has developed [. . .] from the very beginning psychoanalysis has been led to look for processes of development” (1913i).

Freud had to have recourse to a general theory of development in order to account for mental pathologies: they were deviations from the normal pathways, fixations at any given stage that should have been surpassed, regressions to earlier formations, the whole culminating in repetitive, rigid, and irritating structures. It was in these terms that he analyzed the case of the Wolf Man. It was indeed, as its title indicates (From the History of an Infantile Neurosis ), by reconstructing the past that he explained the pathology of the adult (text written essentially in 1914, was published in 1918).

In 1915, Freud wrote Overview of the Transference Neurosis (1985a) in a state of feverish agitation. He was trying to establish correspondences between three histories: the history of the succession of stages in normal psychogenesis; then, more hypothetically, the history of the layering of the psychoneuroses and neuroses (depending on the time of the fixation) in the course of those stages and, even more hypothetically, the history of the stages he refers to as being “phylogenic” in the course of the history of humanity (Perron, 1994). In doing so he based his reasoning, as he had already done on several occasions (particularly in Totem and Taboo, 1912-13a), on Ernst Haeckel’s hypothesis, “ontogeny recapitulates phylogeny.”

He finally developed a general theory of psychogenesis wherein the stages are considered to be “developmental phases” (today we prefer to speak of “modes of organization”) that are characterized by the primacy of an erogenous zone and an object-based mode of relation: the oral, anal, phallic stages and adult genital organization (Brusset, 1992).

Having formulated his second topography and his second theory of the instincts (1920-23), Freud devoted more time to structural considerations and allowed synchronic aspects to outweigh diachronic aspects. Others nevertheless devoted themselves to developing a direct approach to children and the psychoanalytic treatment of children. The pioneers, his daughter Anna Freud and Melanie Klein, took quite different stances on practical and theoretical questions, so much so that their opposing positions shook the foundations of the British Psychoanalytic Society.

Since then an important trend in research, supported by extensive experience of analyzing children, has stressed the pregenital phases of development and the processes of the first individuation, with direct observation of the baby and the interactions between the mother and baby (J. Bowlby, R. Spitz, D. W. Winnicott, D. Stern, B. Cramer, S. Lebovici), but also with regard to the serious alterations we find in cases of infantile autism and psychoses (M. Mahler, M. Klein, F. Tustin, D. Multzer, R. Diatkine). It is worth observing that infant and child psychiatry owes a large part of its remarkable development over the last thirty years to psychoanalysts.

The developmental perspective in psychoanalysis calls for a certain number of comments:

As we have seen, Freud was the first to try to go back through personal history to undo a fixation point; in order, according to a metaphor that was dear to him, to deconstruct a unit and then reconstruct it with a better balance from the vestiges thus revealed. He went on to considerably modify these oversimplistic views, admitting that traces of the past do not exist as such but are constantly remodeled retroactively.
In which case, what history is in question (Le Beuf, Perron, Pragier, 1997)? Analysts cannot limit themselves to working on factual history, the history that any careful anamnestic investigation would reveal. The analyst’s only informant is the patient and the history he or shere-counts is made up as much of fantasies as it is of memories of events whose reality is unverifiable; it is largely constructed retroactively and most of the materials are consigned to the unconscious (Viderman, 1970). In fact the history that the analyst is trying to reconstitute is the psychic history of the subject as revealed by the functioning of the subject’s mind. It may be very different from a “real” history as told step by step.
But how is it grasped? Direct observation of the baby, which is supposed to provide first-hand objective material is far from being as conclusive as it might appear: the data has no meaning except when interpreted in the light of the psychoanalytic theory it is supposed to support.
From a theoretical point of view, psychoanalysis was shaken by the great controversy on “structure or history?” which began to spread during the seventies from linguistics to all human sciences. We have seen and continue to see in this context the opposition between those who give pride of place to individual history (in currents as diverse as Hartmanian Ego-Psychology and the Kleinian school) and those who reserve it for structure (particularly Lacan and those who followed him).
Roger Perron

See also: Anthropology and psychoanalysis; Change; “Claims of Psychoanalysis to Scientific Interest”; Developmental disorders; Fixation; Individual; Infant development; Infant observation (direct); Maturation; Ontogenesis; Phylogenesis; Process.

Bibliography
Brusset, Bernard. (1992). Le développement libidinal. Paris: Presses Universitaires de France.

Le Beuf, Diane, Perron, Roger, and Pragier, Georges (Eds.). (1997). Construire l’histoire. Paris: Presses Universitaires de France. Monographies de la Revue française de Psychanalyse.

Perron, Roger. (1994). Une fiction préhistorique de Freud. In A. Fine, R. Perron, F. Sacco (Eds.), Psychanalyse et préhistoire. Paris: Presses Universitaires de France.

——. (1995). Prendre pour vrai. Revue française de Psychanalyse, 59, 2, 499-512.

——. (1995). Théories de la psychogenèse. In Encyclopédie médico-chirurgicale. Vol. Psychiatrie. Paris: E.M.-C., fasc. 37-810-F-30.

Viderman, Serge. (1970). La construction de l’espace analytique. Paris: Denoël.

Further Reading
Tyson, Phyllis, and Tyson, Robert. (1990). Psychoanalytic theories of development: An integration. New Haven; London: Yale University Press.

Tyson, Phyllis. (2002). The challenges of psychoanalytic developmental theory. Journal of the American Psychoanalytic Association

𝐌𝐀𝐈𝐍 𝐒𝐂𝐇𝐎𝐎𝐋 𝐎𝐅 𝐓𝐇𝐎𝐔𝐆𝐇𝐓 𝐎𝐍 𝐇𝐎𝐖
𝐌𝐀𝐂𝐑𝐎𝐄𝐂𝐎𝐍𝐎𝐌𝐘 𝐅𝐔𝐍𝐂𝐓𝐈𝐎𝐍
𝚌𝚕𝚊𝚜𝚜𝚒𝚌𝚊𝚕 𝚂𝙲𝙷𝙾𝙾𝙻:
Classical economics is a broad term that refers to the dominant school of thought for economics in the 18th and 19th centuries. Most consider Scottish economist Adam Smith the progenitor of classical economic theory. However, Spanish scholastics and French physiocrats made earlier contributions. Other notable contributors to classical economics include David Ricardo, Thomas Malthus, Anne Robert Jacques Turgot, John Stuart Mill, Jean-Baptiste Say, and Eugen Böhm von Bawerk.

KEY TAKEAWAYS
Classical economic theory was developed shortly after the birth of western capitalism. It refers to the dominant school of thought for economics in the 18th and 19th centuries.
Classical economic theory helped countries to migrate from monarchic rule to capitalistic democracies with self-regulation.
Adam Smith’s 1776 release of the Wealth of Nations highlights some of the most prominent developments in classical economics.
Theories to explain value, price, supply, demand, and distribution, was the focus of classical economics.
Classical economics was eventually replaced with more updated ideas, such as Keynesian economics, which called for more government intervention.
Understanding Classical Economics
Self-regulating democracies and capitalistic market developments form the basis for classical economics. Before the rise of classical economics, most national economies followed a top-down, command-and-control, monarchic government policy system. Many of the most famous classical thinkers, including Smith and Turgot, developed their theories as alternatives to the protectionist and inflationary policies of mercantilist Europe. Classical economics became closely associated with economic, and later political, freedom.
𝟸 𝙺𝙴𝚈𝙽𝙴𝚂𝙸𝙰𝙽 𝚂𝙲𝙷𝙾𝙾𝙻:
Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynesian economics is considered a “demand-side” theory that focuses on changes in the economy over the short run. Keynes’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs.  

Based on his theory, Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Subsequently, Keynesian economics was used to refer to the concept that optimal economic performance could be achieved—and economic slumps prevented—by influencing aggregate demand through activist stabilization and economic intervention policies by the government. 

KEY TAKEAWAYS

Keynesian economics focuses on using active government policy to manage aggregate demand in order to address or prevent economic recessions.

Keynes developed his theories in response to the Great Depression, and was highly critical of previous economic theories, which he referred to as “classical economics”. 

Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.

Keynesian Economics

Understanding Keynesian Economics

Keynesian economics represented a new way of looking at spending, output, and inflation. Previously, what Keynes dubbed classical economic thinking held that cyclical swings in employment and economic output create profit opportunities that individuals and entrepreneurs would have an incentive to pursue, and in so doing correct the imbalances in the economy. According to Keynes’s construction of this so-called classical theory, if aggregate demand in the economy fell, the resulting weakness in production and jobs would precipitatejh a decline in prices and wages. A lower level of inflation and wages would induce employers to make capital investments and employ more people, stimulating employment and restoring economic growth. Keynes believed that the depth and persistence of the Great Depression, however, severely tested this hypothesis.

𝟹 𝙽𝙴𝚆 𝙺𝙴𝚈𝙽𝙴𝚂𝙸𝙰𝙽 𝚂𝙲𝙷𝙾𝙾𝙻
New Keynesian economics is a modern macroeconomic school of thought that evolved from classical Keynesian economics. This revised theory differs from classical Keynesian thinking in terms of how quickly prices and wages adjust.

New Keynesian advocates maintain that prices and wages are “sticky,” meaning they adjust more slowly to short-term economic fluctuations. This, in turn, explains such economic factors as involuntary unemployment and the impact of federal monetary policies.

KEY TAKEAWAYS
New Keynesian economics is a modern twist on the macroeconomic doctrine that evolved from classical Keynesian economics principles.
Economists argued that prices and wages are “sticky,” causing involuntary unemployment and monetary policy to have a big impact on the economy.
This way of thinking became the dominant force in academic macroeconomics from the 1990s through to the financial crisis of 2008.
Understanding New Keynesian Economics
British economist John Maynard Keynes’ idea in the aftermath of the Great Depression that increased government expenditures and lower taxes can stimulate demand and pull the global economy out of a downturn became the dominant way of thinking for much of the 20th century. That slowly began to change in 1978 when After Keynesian Economics was published.

𝟺. 𝙼𝙾𝙽𝙴𝚃𝙰𝚁𝙸𝚂𝚃 𝚂𝙲𝙷𝙾𝙾𝙻
advocate of modern-day monetarism. The monetarist theory was expounded by Friedman in a book he co-wrote with Anna Schwartz, “A Monetary History of the United States, 1867–1960,” and in a 1967 speech at the American Economic Association.
MInterestingly, while the monetarist theory is essentially a guide for central bank policies, Friedman was opposed to the whole idea of central banks, such as the Federal Reserve Bank in the United States.
𝟻. 𝙰𝚄𝚂𝚃𝚁𝙸𝙰𝙽 𝚂𝙲𝙷𝙾𝙾𝙻
Austrian school of economics was founded in 1871 with the publication of Carl Menger’s Principles of Economics. menger, along with william stanley jevons and leon walras, developed the marginalist revolution in economic analysis. Menger dedicated Principles of Economics to his German colleague William Roscher, the leading figure in the German historical school, which dominated economic thinking in German-language countries. In his book, Menger argued that economic analysis is universally applicable and that the appropriate unit of analysis is man and his choices. These choices, he wrote, are determined by individual subjective preferences and the margin on which decisions are made (see marginalism). The logic of choice, he believed, is the essential building block to the development of a universally valid economic theory.
The historical school, on the other hand, had argued that economic science is incapable of generating universal principles and that scientific research should instead be focused on detailed historical examination. The historical school thought the English classical economists mistaken in believing in economic laws that transcended time and national boundaries. Menger’s Principles of Economics restated the classical political economy view of universal laws and did so using marginal analysis. Roscher’s students, especially Gustav Schmoller, took great exception to Menger’s defense of “theory” and gave the work of Menger and his followers, eugen böhm-bawerk and Friedrich Wieser, the derogatory name “Austrian school” because of their faculty positions at the University of Vienna. The term stuck.
Since the 1930s, no economists from the University of Vienna or any other Austrian university have become leading figures in the so-called Austrian school of economics. In the 1930s and 1940s, the Austrian school moved to Britain and the United States, and scholars associated with this approach to economic science were located primarily at the London School of Economics (1931–1950), New York University (1944–), Auburn University (1983–), and George Mason University (1981–). Many of the ideas of the leading mid-twentieth-century Austrian economists, such as ludwig von mises and f. a. hayek, are rooted in the ideas of classical economists such as adam smith and david hume, or early-twentieth-century figures such as knut wicksell, as well as Menger, Böhm-Bawerk, and Friedrich von Wieser. This diverse mix of intellectual traditions in economic science is even more obvious in contemporary Austrian school economists, who have been influenced by modern figures in economics. These include armen alchian, james buchanan, ronald coase, Harold Demsetz, Axel Leijonhufvud, douglass north, Mancur Olson, vernon smith, Gordon Tullock, Leland Yeager, and Oliver Williamson, as well as Israel Kirzner and Murray Rothbard. While one could argue that a unique Austrian school of economics operates within the economic profession today, one could also sensibly argue that the label “Austrian” no longer possesses any substantive meaning. In this article I concentrate on the main propositions about economics that so-called Austrians believe.
𝟼. 𝙽𝙴𝙾𝙲𝙻𝙰𝚂𝚂𝙸𝙲𝙰𝙻
Neoclassical economics is also considered overly dependent on complex, unrealistic mathematical models. The complex models are not applicable to describe the real economy. In response to the criticism, American educator and economist Milton Friedman claimed that a theory should be judged by its ability to predict. The complexity of the model or realism of the assumptions is not a standard to judge

CONTRIBUTION OF THE VARIOUS SCHOOLS OF THOUGHT TO THE DEVELOPMENT OF MACROECONOMICS:
1.) THE CLASSICAL SCHOOL: The classical economics was an English school of economic thought that originated during the late 18th century with Adam Smith and that reached maturity in the works of David Ricardo and John Stuart Mill. The theories of the classical school, which dominated economic thinking in great Britain until about 1870, focused on economic growth and economic freedom, stressing laissez-faire ideas and free competition.
CONTRIBUTION OF THE CLASSICAL SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) The classical school advocated for liberated markets free from government influences that dictated the prices of goods.
b.) Smith argued that free market could regulate and readjust themselves if third parties did not get involved which they did with what they refer to as “the invisible hand”.
c.) The theory led to the development of the neoclassical and modern theories that considered a wide range of factors influencing an economy.
d.) It resulted in the further development of capitalism and the use of trade as a factor to determine the effectiveness of an economy rather than the stockpiling of gold.
e.) The concept of comparative advantage developed by Ricardo reiterated that an economy should focus on what it can produce efficiently and trade with what it can produce.
2.) KEYNESIAN SCHOOL: Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effect on output, employment and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the great depression. Keynesian economics is considered a demand-side theory that focuses on changes in the economy over the short run.
CONTRIBUTION OF THE KEYNESIAN SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) Keyne’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs.
b.) Keynesian economics focuses on using active government policy to manage aggregate demand inorder to address or prevent economic recession.
c.) Keynes advocated for increased government expenditure and lower taxes to stimulate demand and pull the global economy out of the depression.
d.) Fiscal and monetary policies are the primary tools recommended by the Keynesian economists to manage the economy and fight unemployment.
3.) MONETARIST SCHOOL: Monetarism is an economic school of thought which states that the supply of money in an economy is the primary driver of economic growth. Monetarism is closely associated with the economist Milton Friedman, who argued based on the quantity theory of money, that the government should keep the money supply fairly steady, expanding it slightly each year to allow for the natural growth of the economy.
CONTRIBUTION OF THE MONETARIST SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) Monetarism is a macroeconomic theory stating that governments can foster economic stability by targeting the growth rate of the money supply.
b.) The monetarist school brought about the quantity theory of money, which states that money supply(M) multiplied by the rate at which money is spent (V) equals the nominal expenditures(P*Q) in the economy.
c.) Monetarism emphasizes on the use of the monetary policy as an economic tool to adjust interest rates that in turn control the money supply.
4.) NEW KEYNESIAN SCHOOL: The new keynesian economics is a modern macroeconomic school of thought that evolved from the classical keynesian economics. New keynesian advocated that prices and wages are sticky meaning that they adjust more slowly to short-term economic fluctuations.
CONTRIBUTION OF THE NEW KEYNESIAN SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) New keynesian theories rely on the stickiness of wages and prices to explain why involuntary unemployment exists and why monetary policy has such a strong influence on economic activities.
b.) New keynesian economics argue that macroeconomic stabilization by the government(using fiscal policy) and the central bank(using monetary policy) can lead to more efficient macroeconomic outcome than w laissez-faire policy would.
5.) NEOCLASSICAL SCHOOL: The neoclassical economics is a broad theory that focuses on supply and demand as the driving forces behind the production, pricing and consumption of goods and services. It emerged in around 1900 to compete with the earlier theories of classical economics.
CONTRIBUTION OF THE NEOCLASSICAL SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) Neoclassical economist argue that the consumer’s perception of a product’s value is the driving factor in its price.
b.) Neoclassical economists maintain that the forces of demand and supply lead to an efficient allocation of resources.
c.) It also maintained that competition leads to efficient allocation of resources.
d.) It concludes that equilibrium in the market and growth at full employment should be the primary economic priorities of the government.
6.) THE AUSTRIAN SCHOOL: The Austrian school is an economic school of thought that originated in Vienna during the late 19th century with the works of Carl Menger, an economist who lived from 1840-1921.The Austrian school is set apart by its belief that the broad economy are the sum of smaller economic decisions and actions.
CONTRIBUTION OF THE AUSTRIAN SCHOOL TO THE DEVELOPMENT OF MACROECONOMICS:
a.) Austrian economists emphasize processes of cause-and-effect in real world economics, the implications of time and uncertainty, the role of the entrepreneur, and the use of prices to coordinate economic activity.
b.) Menger’s contribution to the theory of marginal utility focused on the subjective use-value of economic goods and the hierarchical or ordinal nature of how people assign value to different goods.
c.) Menger also developed a market-based theory of the function and origin of money as a medium of exchange to facilitate trade.
d.) The Austrian economists (Menger, Eugen Von Bohm-Bawerk) furthered the Austrian economic theory by emphasising the element of time I economic activity- that all economic activity occur over specific period of time.
e.) Bohm-Bawerk’s student, Ludwig Von Mises would later go on to combine the economic theories of Menger and Bohm-Bawerk with the idea of Swedish economist Knut Wicksell on money, credit and interest rates to create Austrian Business Cycle Theory(ABCT).
f.) Mises is also known for his role in disputing the possibility of rational economic planning by socialist governments.
g.) Hayek’s work in Austrian economics emphasized the role of information in the economy and the use of prices as a means to communicate information and coordinate economic activity.

1. Classical School
The Classical school, which is regarded as the first school of economic thought, is associated with the 18th Century Scottish economist Adam Smith, and those British economists that followed, such as Robert Malthus and David Ricardo.
The main idea of the Classical school was that markets work best when they are left alone, and that there is nothing but the smallest role for government. The approach is firmly one of laissez-faire and a strong belief in the efficiency of free markets to generate economic development. Markets should be left to work because the price mechanism acts as a powerful ‘invisible hand’ to allocate resources to where they are best employed.
In terms of explaining value, the focus of classical thinking was that it was determined mainly by scarcity and costs of production.
In terms of the macro-economy, the Classical economists assumed that the economy would always return to the full-employment level of real output through an automatic self-adjustment mechanism.
It is widely recognised that the Classical period lasted until 1870.

2.Keynesian economics

Keynesian economists broadly follow the main macro-economic ideas of British economist John Maynard Keynes. Keynes is widely regarded as the most important economist of the 20th Century, despite falling out of favour during the 1970s and 1980s following the rise of new classical economics.

3. MONETARIST ECONOMICS

Monetarism, school of economic thought that maintains that the money supply (the total amount of money in an economy, in the form of coin, currency, and bank deposits) is the chief determinant on the demand side of short-run economic activity. American economist Milton Friedman is generally regarded as monetarism’s leading exponent. Friedman and other monetarists advocate a macroeconomic theory and policy that diverge significantly from those of the formerly dominant Keynesian school. The monetarist approach became influential during the 1970s and early ’80s.
Underlying the monetarist theory is the equation of exchange, which is expressed as MV = PQ. Here M is the supply of money, and V is the velocity of turnover of money (i.e., the number of times per year that the average dollar in the money supply is spent for goods and services), while P is the average price level at which each of the goods and services is sold, and Q represents the quantity of goods and services produced.

4. NEW KEYNESIAN ECONOMICS

New Keynesian economics is the school of thought in modern macroeconomics that evolved from the ideas of John Maynard Keynes. Keynes wrote The General Theory of Employment, Interest, and Money in the 1930s, and his influence among academics and policymakers increased through the 1960s. In the 1970s, however, new classical economists such as Robert Lucas, Thomas J. Sargent, and Robert Barro called into question many of the precepts of the Keynesian revolution. The label “new Keynesian” describes those economists who, in the 1980s, responded to this new classical critique with adjustments to the original Keynesian tenets.
The primary disagreement between new classical and new Keynesian economists is over how quickly wages and prices adjust. New classical economists build their macroeconomic theories on the assumption that wages and prices are flexible. They believe that prices “clear” markets—balance supply and demand—by adjusting quickly. New Keynesian economists, however, believe that market-clearing models cannot explain short-run economic fluctuations, and so they advocate models with “sticky” wages and prices. New Keynesian theories rely on this stickiness of wages and prices to explain why involuntary unemployment exists and why monetary policy has such a strong influence on economic activity.
A long tradition in macroeconomics (including both Keynesian and monetarist perspectives) emphasizes that monetary policy affects employment and production in the short run because prices respond sluggishly to changes in the money supply. According to this view, if the money supply falls, people spend less money and the demand for goods falls. Because prices and wages are inflexible and do not fall immediately, the decreased spending causes a drop in production and layoffs of workers.

4.THE NEW KEYNESIAN ECONOMICS

Keynesian economics
Keynesian economists broadly follow the main macro-economic ideas of British economist John Maynard Keynes. Keynes is widely regarded as the most important economist of the 20th Century, despite falling out of favour during the 1970s and 1980s following the rise of new classical economics.
In essence, Keynesian economists are skeptical that, if left alone, free markets will inevitably move towards a full employment equilibrium.
The Keynesian approach is interventionist, coming from a belief that the self interest which governs micro-economic behaviour does not always lead to long run macro-economic development or short run macro-economic stability. Keynesian economics is essentially a theory of aggregate demand, and how best best to manipulate it through macro-economic policy.

5. NEO-CLASSICAL ECONOMICS

The neo-classical school of economic thought is a wide ranging school of ideas from which modern economic theory evolved. The method is clearly scientific, with assumptions, and hypothesis and attempts to derive general rules or principles about the behaviour of firms and consumers.
For example, neo-classical economics assumes that economic agents are rational in their behaviour, and that consumers look to maximise utility and firms look to maximise profits. The contrasting objectives of maximising utility and profits forms the basis of demand and supply theory. Another important contribution of neo-classical economics was a focus on marginal values, such as marginal cost and marginal utility.
Neo-classical economics is associated with the work of William Jevons, Carl Menger and Leon Walras.
New classical macro-economics dates from the 1970s, and is an attempt to explain macro-economic problems and issues using micro-economic concepts like rational behaviour, and rational expectations. New classical economics is associated with the work of Chicago economist, Rebert.

6. THE AUSTRISN SCHOOL

The Austrian school of economics was founded in 1871 with the publication of Carl Menger’s Principles of Economics. menger, along with william stanley jevons and leon walras, developed the marginalist revolution in economic analysis. Menger dedicated Principles of Economics to his German colleague William Roscher, the leading figure in the German historical school, which dominated economic thinking in German-language countries. In his book, Menger argued that economic analysis is universally applicable and that the appropriate unit of analysis is man and his choices. These choices, he wrote, are determined by individual subjective preferences and the margin on which decisions are made (see marginalism). The logic of choice, he believed, is the essential building block to the development of a universally valid economic theory.
The historical school, on the other hand, had argued that economic science is incapable of generating universal principles and that scientific research should instead be focused on detailed historical examination. The historical school thought the English classical economists mistaken in believing in economic laws that transcended time and national boundaries. Menger’s Principles of Economics restated the classical political economy view of universal laws and did so using marginal analysis. Roscher’s students, especially Gustav Schmoller, took great exception to Menger’s defense of “theory” and gave the work of Menger and his followers, eugen böhm-bawerk and Friedrich Wieser, the derogatory name “Austrian school” because of their faculty positions at the University of Vienna. The term stuck.
Since the 1930s, no economists from the University of Vienna or any other Austrian university have become leading figures in the so-called Austrian school of economics. In the 1930s and 1940s, the Austrian school moved to Britain and the United States, and scholars associated with this approach to economic science were located primarily at the London School of Economics (1931–1950), New York University (1944–), Auburn University (1983–), and George Mason University (1981–). Many of the ideas of the leading mid-twentieth-century Austrian economists, such as ludwig von mises and f. a. hayek, are rooted in the ideas of classical economists such as adam smith and david hume, or early-twentieth-century figures such as knut wicksell, as well as Menger, Böhm-Bawerk, and Friedrich von Wieser. This diverse mix of intellectual traditions in economic science is even more obvious in contemporary Austrian school economists, who have been influenced by modern figures in economics. These include armen alchian, james buchanan, ronald coase, Harold Demsetz, Axel Leijonhufvud, douglass north, Mancur Olson, vernon smith, Gordon Tullock, Leland Yeager, and Oliver Williamson, as well as Israel Kirzner and Murray Rothbard. While one could argue that a unique Austrian school of economics operates within the economic profession today, one could also sensibly argue that the label “Austrian” no longer possesses any substantive meaning. In this article I concentrate on the main propositions about economics that so-called Austrians believe.

NAME: OYI TOCHUKWU PRAISE.
CLASS: JUPEB
REG NO: UNN/J20/SOCS/023.
TOPIC: MACRO ECONOMICS.
SECTION: 2ND SEMESTER.

QUESTION: MAIN SCHOOL OF THOUGHT IN MACRO ECONOMICS.

What is macroeconomics?
>>Macroeconomics is a branch of economics that studies how an overall economy, the market or other systems that operate on a large scale, behaves. Macroeconomics studies economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.

THE MAIN SCHOOL OF THOUGHT IN MACRO ECONOMICS ARE AS FOLLOWS:
1. The macroeconomics of Keynes.
2. The monetarist tradition.
3.The new classical school.
4. The new Keynesian school.
5. The supply side macroeconomics.
6. Neo classical and Neo Neo classical real business cycle theory.
7. The structuralist school.

a. MACROECONOMICS OF KEYNES
>>
What Is Keynesian Economics?
Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynesian economics is considered a “demand-side” theory that focuses on changes in the economy over the short run. Keynes’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs.  
Based on his theory, Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Subsequently, Keynesian economics was used to refer to the concept that optimal economic performance could be achieved—and economic slumps prevented—by influencing aggregate demand through activist stabilization and economic intervention policies by the government. 
Keynesian economics focuses on using active government policy to manage aggregate demand in order to address or prevent economic recessions.
Keynes developed his theories in response to the Great Depression, and was highly critical of previous economic theories, which he referred to as “classical economics”. 
Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.

b. the monetarist tradition.
>>What Is Monetarism?
Monetarism is a macroeconomic theory which states that governments can foster economic stability by targeting the growth rate of the money supply. Essentially, it is a set of views based on the belief that the total amount of money in an economy is the primary determinant of economic growth.
Central to monetarism is the quantity theory of money, which states that the money supply (M) multiplied by the rate at which money is spent per year (V) equals the nominal expenditures (P * Q) in the economy.
Monetarism is closely associated with economist Milton Friedman, who argued that the government should keep the money supply fairly steady, expanding it slightly each year mainly to allow for the natural growth of the economy.
Monetarism is a branch of Keynesian economics that emphasizes the use of monetary policy over fiscal policy to manage aggregate demand, contrary to most Keynesians.
Although most modern economists reject the emphasis on money growth that monetarists purported in the past, some core tenets of the theory have become a mainstay in nonmonetarist analysis.

C. the new classical school theory
>>New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations.
New classical macroeconomics strives to provide neoclassical microeconomic foundations for macroeconomic analysis. This is in contrast with its rival new Keynesian school that uses microfoundations such as price stickiness and imperfect competition to generate macroeconomic models similar to earlier, Keynesian ones.

d. the new Keynesian school.
>> What Is New Keynesian Economics?
New Keynesian economics is a modern macroeconomic school of thought that evolved from classical Keynesian economics. This revised theory differs from classical Keynesian thinking in terms of how quickly prices and wages adjust.
New Keynesian advocates maintain that prices and wages are “sticky,” meaning they adjust more slowly to short-term economic fluctuations. This, in turn, explains such economic factors as involuntary unemployment and the impact of federal monetary policies.
New Keynesian economics became the dominant force in academic macroeconomics from the 1990s through to the financial crisis of 2008.
The new Keynesian theory attempted to address, among other things, the sluggish behavior of prices and its cause, and how market failures could be triggered by inefficiencies and might justify government intervention. The benefits of government intervention remain a flashpoint for debate. New Keynesian economists made a case for expansionary monetary policy, arguing that deficit spending encourages saving, rather than increasing demand or economic growth.

e. the supply side macroeconomics.
>> Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit from greater supplies of goods and services at lower prices, and employment will increase. Demand-side economics opposes this theory.
A basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue.The Laffer curve suggests that when the tax level is too high, lower tax rates will boost government revenue through higher economic growth, though the level at which rates are deemed “too high” is disputed.A 2012 poll of leading economists found none agreed that reducing the US federal income tax rate would result in higher annual tax revenue within five years. Critics also point out that several large tax cuts in the United States over the last 40 years have not increased revenue.
The term “supply-side economics” was thought for some time to have been coined by journalist Jude Wanniski in 1975, but according to Robert D. Atkinson the term “supply side” was first used in 1976 by Herbert Stein (a former economic adviser to President Richard Nixon) and only later that year was this term repeated by Jude Wanniski. The term alludes to ideas of economists Robert Mundell and Arthur Laffer.

f. neo classical and Neo Neo classical school theory.
>>What Is Neoclassical Economics?
Neoclassical economics is a broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services. It emerged in around 1900 to compete with the earlier theories of classical economics.
Classical economists assume that the most important factor in a product’s price is its cost of production.
Neoclassical economists argue that the consumer’s perception of a product’s value is the driving factor in its price.
They call the difference between actual production costs and retail price the economic surplus.
One of the key early assumptions of neoclassical economics is that utility to consumers, not the cost of production, is the most important factor in determining the value of a product or service. This approach was developed in the late 19th century based on books by William Stanley Jevons, Carl Menger, and Léon Walras.
Neoclassical economics theories underlie modern-day economics, along with the tenets of Keynesian economics. Although the neoclassical approach is the most widely taught theory of economics, it has its detractors.

g. the structuralist school.
>>Structuralist economics is an approach to economics that emphasizes the importance of taking into account structural features (typically) when undertaking economic analysis. The approach originated with the work of the Economic Commission for Latin America (ECLA or CEPAL) and is primarily associated with its director Raúl Prebisch and Brazilian economist Celso Furtado. Prebisch began with arguments that economic inequality and distorted development was an inherent structural feature of the global system exchange. As such, early structuralist models emphasised both internal and external disequilibria arising from the productive structure and its interactions with the dependent relationship developing countries had with the developed world. Prebisch himself helped provide the rationale for the idea of Import substitution industrialization, in the wake of the Great Depression and World War II. The alleged declining terms of trade of the developing countries, the Singer–Prebisch hypothesis, played a key role in this.

1).CLASSICAL ECONOMIC
The classical school economist is a broad term that refers to the Dominant economic paradigm of the 18th and 19th centuries.
Theories to explain value, price, supply, demand, and distribution, was the focus of classical economics.
Classical economics was eventually replaced with more updated ideas, such as Keynesian economics, which called for more government intervention.
a) Perfect competition
b)No intercession by the public authority
c) the creation of capitalist democracy
d) They advocated for full employment, wages, interest rate and fixed prices
e) government intervention
2).KEYNESIAN ECONOMICS
This school of musings actually follow the thoughts of the Keynesian way of thinking as its establishment while attempting to connect a few parts of miniature financial matters.
They recognize that families and firms follow up on sane assumptions yet accept that there are bunches of market disappointments, along these lines, government can further develop full scale financial aspects utilizing financial and money related strategy.
a) counter cyclical fiscal policy
b)role of aggregate demand .
3). MONETARIST ECONOMIC
The monetarist postulate that the economic health of an economic can be best controlled by changes on monetary supply or money by a governing body
a) They focused on the macroeconomics effect of the supply of money and central banking.
b) They focus solely on maintaining price stability
c) quantity equation of exchange
4)NEW KEYNESIAN ECONOMICS
Keynesian economic theories has a traditional foundation, the new Keynesian do accept that household and firm operate on the basic of rational expectations
a) coordinate failure
b)sticky price with rational expectations
c) implicit contract
5).NEO CLASSICAL ECONOMIC
New classical macro-economics dates from the 1970s, and is an attempt to explain macro-economic problems and issues using micro-economic concepts like rational behaviour, and rational expectations. New classical economics is associated with the work of Chicago economist.
a) role of potential GDP growth
b) growth accounting formula
6). AUSTRIAN ECONOMIC
Austrian school economist believe that human behaviour is too idiosyncratic to model accurately with mathematics and that minimal government intervention is best.

THE CLASSICAL SCHOOL
The old style school (school of thought) is a gathering given to market analysts in the eighteenth and nineteenth century said to have comparable assessments (albeit not absolutely comparable) on some part of the economy.

Scottish mastermind and the known dad of financial aspects Adam Smith was supposed to be the originator or the mainstay of the old style way of thinking. It grew soon after the ascent of private enterprise (the capitalist system).

The old style way of thinking put stock in some financial parts as elements of the full scale economy (macro economy), which are:

a) The conviction of supply encourages demand interest.
b) Full work opportunity.
c) Perfect contest.
d) They likewise accepted that wages, financing costs and costs are not adaptable.
e) No intercession by the public authority (the government)

They accepted that the public authority plays next to zero part to play in the financial exercises saying it will just motivate inflation since they accept that supply provokes interest (demand) and the economy can generally be at balance if the wages are fixed which will turn out revenue to the specialists to deal with family utilization in a manner putting the economy at harmony while forestalling expansion with fixed loan fee.

Having government excluded made the National Income condition to be AE=C+I in a shut, closed or classical economy.

They additionally accepted that if total interest falls the decrease underway and wages would prompt a decrease in wages and costs likewise coming about to a low degree of expansion which would make makers want more capital venture and utilize more work animating the economy and bringing about monetary development.

THE KEYNESIAN SCHOOL:

This was supposed to be revolved around the works of an english mathematician John Maynard Keynes who was an understudy of well known financial expert Alfred Marshall and admirer of Reverend Professor Thomas Malthus the propounded the Malthusian populace hypothesis.

The keynesian hypothesis came up because of the financial trouble encompassing the time of the economic crisis of the early 20s of the 1930’s and 1940’s.

The hypothesis conflicted with the traditional school with the accompanying:

a) One significant point which he went against was the possibility that there is no requirement for government intercession in the economy (strong hand of government). J.M Keynes said the economy can be viably controlled utilizing monetary arrangements by the public authority like loan fees, e.t.c. likewise having confidence in the short run and that the economy isn’t continually at harmony in this way driving the public pay condition to be AE=C+I+G in a shut economy.

b) It likewise contaminated the standard of full business rate which the traditional school had confidence in saying it was only a backhanded type of under work.

He likewise invalidated the conviction held by certain financial analysts that low wages can reestablish full business giving that businesses won’t add representatives to great that can’t be sold in light of the fact that request is powerless.

c) He likewise changed the place of center from the inventory side to the interest side restricting old style scholars J.B Say on his thought that supply spurs its own interest. This resistance was placed into utilization in the economic crisis of the early 20s since there were acceptable however no assets to purchase the merchandise especially in the short run which would from that point have prompted loss of lives. J.M Keynes said government intercession was important to give cash once again into the economy while decreasing assessment rates in order to invigorate request.

d) Wages, financing costs and costs are not fixed.

THE MONETARIST SCHOOL

This way of thinking essentially put stock in the control of the economy by controlling cash supply by administering body.

The driving instrument of this way of thinking is the effect of expansion on monetary development expressing that by controlling the cash supply, swelling can be controlled.

The most perceived individual under this way of thinking is said to Milton Friedman. Different monetarists incorporate previous UK leader, Margaret Thacher, and so on.

THE NEW KEYNESIAN SCHOOL

This school of musings actually follow the thoughts of the Keynesian way of thinking as its establishment while attempting to connect a few parts of miniature financial matters.

They recognize that families and firms follow up on sane assumptions yet accept that there are bunches of market disappointments, along these lines, government can further develop full scale financial aspects utilizing financial and money related strategy.

THE NEOCLASSICAL SCHOOL

school of financial idea is a wide going school of thoughts from which present day monetary hypothesis advanced. The strategy is obviously logical, with presumptions, and speculation and endeavors to determine general standards or standards about the conduct of firms and purchasers.

For instance, neo-traditional financial matters expects that monetary specialists are judicious in their conduct, and that purchasers hope to boost utility and firms hope to augment benefits. The differentiating targets of amplifying utility and benefits shapes the premise of interest and supply hypothesis. Another significant commitment of neo-traditional financial matters was an emphasis on peripheral qualities, like negligible expense and minor utility.

Neo-old style financial matters is related with crafted by William Jevons, Carl Menger and Leon Walras.

THE AUSTRIAN SCHOOL

The Austrian School is a heterodox school of monetary idea that depends on methodological independence—the idea that social wonders result solely from the inspirations and activities of people.

The Austrian School began in late-nineteenth and mid twentieth century Vienna with crafted by Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser, and others. It was methodologically against the more youthful Historical School (situated in Germany), in a question known as Methodenstreit, or technique battle. Current-day financial analysts working in this custom are situated in a wide range of nations, however their work is as yet alluded to as Austrian financial aspects. Among the hypothetical commitments of the early long periods of the Austrian School are the emotional hypothesis of significant worth, marginalism in value hypothesis and the plan of the financial estimation issue, every one of which has become an acknowledged piece of standard financial matters.

Since the mid-twentieth century, standard market analysts have been condemning of the current Austrian School and think about its dismissal of numerical displaying, econometrics and macroeconomic investigation to be outside standard financial matters. During the 1970s, the Austrian School pulled in some recharged revenue after Friedrich Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences.

1) The Classical School: The classical school is a grouping given to economists in the 18th and 19th century said to have similar opinions (although not totally similar) on some aspect of the economy.
Scottish thinker and the known father of economics Adam Smith was said to be the founder or the pillar of the classical school of thought. It developed shortly after the rise of capitalism.
The classical school of thought believed in some economic components as features of the macro economy, which are:
a) Perfect competition (perfect market).
b) Full employment.
c) The belief of supply creates demand.
d) They also believed that wages, interest rates and prices are not flexible.
e) No intervention by the government: They believed that the government has little or no role to play in the economic activities saying it will only cause inflation since they believe that supply creates demand and the economy can always be at equilibrium if the wages are fixed which will provide income to the workers to take care of household consumption in a way putting the economy at equilibrium while preventing inflation with fixed interest rate. This made the National Income equation to be AE=C+I in a closed economy.
They also believed that if aggregate demand falls the reduction in production and wages would lead to a decline in wages and prices also resulting to a low level of inflation which would make producers desire more capital investment and employ more labour stimulating the economy and resulting in economic growth.
Most of the objectives put in place by the classical school are supposedly on the long run and were very effective for the time being until the period of the great depression resulting in the Keynesian school of thought.
2) Keynesian school of thought: This was said to be centered around the writings of a british mathematician John Maynard Keynes who was a student of popular economist Alfred Marshall and admirer of Reverend Professor Thomas Malthus the propounded the Malthusian population theory.
The keynesian theory came up as a result of the economic difficulty surrounding the period of the great depression of the 1930’s and 1940’s.
The theory went against the classical school with the following:
a) Wages, interest rates and prices are not fixed.
b) It also defiled the principle of full employment rate which the classical school believed in saying it was just an indirect form of under employment.
He also refuted the belief held by some economists that low wages can restore full employment giving that employers will not add employees to good that cannot be sold because demand is weak.
c) One major point which he opposed was the idea that there is no need for government intervention in the economy (invincible hand of government). J.M Keynes said the economy can be effectively controlled using fiscal policies by the government like interest rates, e.t.c. also believing in the short run and that the economy is not constantly at equilibrium thus leading the national income equation to be AE=C+I+G in a closed economy.
d) He also changed the point of focus from the supply side to the demand side opposing classical theorists J.B Say on his idea that supply creates its own demand. This opposition was put into use in the great depression since there were good but no resources to buy the goods particularly in the short run which would thereafter have led to loss of lives. J.M Keynes said government intervention was necessary to provide money back into the economy while reducing tax rates so as to stimulate demand.
3) The monetarist school of thought:
This school of thought basically believed in the control of the economy by controlling money supply by governing body.
The driving instrument of this school of thought is the impact of inflation on economic growth stating that by controlling the money supply, inflation can be controlled.
The most recognized person under this school of thought is said to Milton Friedman. Other monetarists include former UK prime minister, Margaret Thacher, e.t.c.
4) The new keynesian school of thought:
This school of thoughts still follow the ideas of the Keynesian school of thought as its foundation while trying to attach some aspects of micro economics.
They acknowledge that households and firms act on rational expectations but still believe that there are lots of market failures, because of this, government can improve macro economics using fiscal and monetary policy.
4) The neo-classical school of economic thought is a wide ranging school of ideas from which modern economic theory evolved. The method is clearly scientific, with assumptions, and hypothesis and attempts to derive general rules or principles about the behaviour of firms and consumers.
For example, neo-classical economics assumes that economic agents are rational in their behaviour, and that consumers look to maximise utility and firms look to maximise profits. The contrasting objectives of maximising utility and profits forms the basis of demand and supply theory. Another important contribution of neo-classical economics was a focus on marginal values, such as marginal cost and marginal utility.

Neo-classical economics is associated with the work of William Jevons, Carl Menger and Leon Walras.
5) New classical: New classical macro-economics dates from the 1970s, and is an attempt to explain macro-economic problems and issues using micro-economic concepts like rational behaviour, and rational expectations. New classical economics is associated with the work of Chicago economist, Robert Lucas.
6) The Austrian school of thought:
The Austrian School is a heterodox school of economic thought that is based on methodological individualism—the concept that social phenomena result exclusively from the motivations and actions of individuals.
The Austrian School originated in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser, and others. It was methodologically opposed to the younger Historical School (based in Germany), in a dispute known as Methodenstreit, or methodology struggle. Current-day economists working in this tradition are located in many different countries, but their work is still referred to as Austrian economics. Among the theoretical contributions of the early years of the Austrian School are the subjective theory of value, marginalism in price theory and the formulation of the economic calculation problem, each of which has become an accepted part of mainstream economics.
Since the mid-20th century, mainstream economists have been critical of the modern day Austrian School and consider its rejection of mathematical modelling, econometrics and macroeconomic analysis to be outside mainstream economics. In the 1970s, the Austrian School attracted some renewed interest after Friedrich Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences.