Classical Economics Uses The Value Theory - 1966 Words

The world economy has been fluctuating drastically in the past decade and continues to change every day. Endless debates on which economist’s theory (Classical or Hayek, and Keynesian) is right and whose is wrong regarding different aspects of the economy, such as government intervention, how the economy is driven, and who is paying for stimulus packages in the short and long term, are ongoing. Both Hayek and Keynesian have different ideas and ways of dealing with the economy and both believe they are superior to one another. Classical economic theory is the concept of a laissez-faire economic market. A laissez-faire economic market is most commonly known as â€Å"free market,† (Econ Stories, 2010, Jan. 23). It requires little to no government control. It also gives individuals the freedom to their own self-interests and wants. This guarantees that economic resources are targeted to the individuals who want them and businesses in the marketplace. Classical economics u ses the value theory. The value theory encompasses a range of approaches to understanding how, why, and to what degree the object holds value and how much it is desired by the individual or subject of valuing is a person, idea, object, or anything else, to determine prices in the economic market and how to manipulate them. The value of an item is determined based on that item’s individual production output, technology and wages paid to produce the item. (Vitez, O., January 2016). Keynesian economic theoryShow MoreRelatedClassical and Neoclassical Economists: Adam Smith and John Maynard Keynes1289 Words   |  6 Pagesunderstand how economics really work in today’s age we must think about how those economic ideas, revolutionary theories of many economists, that helped to shape the economic structure as we know it now, through many individuals and school of economic though that has existed through the ages. 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