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The parable of the broken window was introduced by French economist Frédéric Bastiat in his 1850 essay "That Which Is Seen, and That Which Is Not Seen" ("Ce qu'on voit et ce qu'on ne voit pas") to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.
Finally, the art of economics consists of looking not just at the immediate effects of a policy but at its longer-term effects for all groups. [3] Chapter 2, "The Broken Window", uses the example of a broken window to demonstrate what Hazlitt considers the fallacy that destruction can be good for the economy. He argues that while the broken ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
The Dow Jones Industrial Average (INDEX: ^DJI) is a mixed bag today. There's a handful of big winners and a bushel of big losers, and the index trades roughly flat when all is said and done. Of ...
Economists commonly use the term recession to mean either a period of two successive calendar quarters each having negative growth [clarification needed] of real gross domestic product [1] [2] [3] —that is, of the total amount of goods and services produced within a country—or that provided by the National Bureau of Economic Research (NBER): "...a significant decline in economic activity ...
This graphical illustration is still used today to define and explain a variety of other concepts and theories in economics. A simple explanation of the law of demand is that all else equal, at a higher price, consumer will demand less quantity of a good and vice versa. The law of demand applies to a variety of organisational and business ...
The earlier term for the discipline was "political economy", but since the late 19th century, it has commonly been called "economics". [22] The term is ultimately derived from Ancient Greek οἰκονομία (oikonomia) which is a term for the "way (nomos) to run a household (oikos)", or in other words the know-how of an οἰκονομικός (oikonomikos), or "household or homestead manager".
The Solow–Swan model worked out by Robert Solow and, independently, Trevor Swan in the 1950s achieved more long-lasting success, however, and is still today a common textbook model for explaining economic growth in the long-run. [32] The model operates with a production function where national output is the product of two inputs: capital and ...