If you have done research in your spare time then you would have definitely come across other ideologies and notions in economics.
The one we primarily learn in A-level economics is Keynesian economics which believes that the private sector could choose decisions which would create inefficiency in the economy. To counteract this effect they believe that there should be policy measures put in place by the government in particular monetary policy (creating low interest rates) or by utilising fiscal policy to stabilise price levels and output because of the damaging effects.
Austrian economics however disagree with this very strongly. This kind of intervention by governments would create a false economic setting misinforming firms and consumers about the real price level, what is generally accepted by Austrian economists is that the economy works best when there is no form of any discretion at all and that markets equilibrate on their own. If governments play a big role in an economy this could result in 'crowding out' of investments and the stifling of private sectors.
They also criticise Keynesians on their mathematical models which assume many factors that can prove to be false since many factors are hard to calculate and measure and some are purely irrational so making these assumptions can cause a severe degree of inaccuracy of how the economy should be run. Keynesians believe that macroeconomics is a very good procedure to secure economic sustainability whereas Austrian economists think it is to do with micro-economic factors.
Coming into the study of economics, you will be instantly bombarded with different views. What you choose to believe in should be from your views and your own research in it. Economics is as varying and as fundamental as our bodies, appreciate it.
The one we primarily learn in A-level economics is Keynesian economics which believes that the private sector could choose decisions which would create inefficiency in the economy. To counteract this effect they believe that there should be policy measures put in place by the government in particular monetary policy (creating low interest rates) or by utilising fiscal policy to stabilise price levels and output because of the damaging effects.
Austrian economics however disagree with this very strongly. This kind of intervention by governments would create a false economic setting misinforming firms and consumers about the real price level, what is generally accepted by Austrian economists is that the economy works best when there is no form of any discretion at all and that markets equilibrate on their own. If governments play a big role in an economy this could result in 'crowding out' of investments and the stifling of private sectors.
They also criticise Keynesians on their mathematical models which assume many factors that can prove to be false since many factors are hard to calculate and measure and some are purely irrational so making these assumptions can cause a severe degree of inaccuracy of how the economy should be run. Keynesians believe that macroeconomics is a very good procedure to secure economic sustainability whereas Austrian economists think it is to do with micro-economic factors.
Coming into the study of economics, you will be instantly bombarded with different views. What you choose to believe in should be from your views and your own research in it. Economics is as varying and as fundamental as our bodies, appreciate it.
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