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Economic Theory

Economic theory is a framework for understanding how the U.S. economy works.

Aggregate Supply
Provides a brief introduction to the components of supply. Describes inputs, such as labor, capital, and natural resources. Labor includes employment, unemployment, and productivity. Economic outputs are also explained, including products and services.

Traditional Economy
A traditional economy relies on hunting, fishing, gathering or farming for its base. As the name implies, economic decisions are guided by traditions.

Business Cycle
What stage of the business cycle is the economy in right now? If you don't know the answer to that question, read this article immediately. It will guide you to make the correct financial choices.

Asset Allocation
What is asset allocation, and why it is important to your prosperity.

Comparative Advantage
What makes a country more competitive.

Competitive Advantage
A competitive advantage is what distinguishes you from all others. Whether you are an employee, a business or a country, you need to have a clear competitive advantage and communicate it to your customers.

Reaganomics
Reaganomics describes the successful economic policies enacted by President Ronald Reagan. It cut taxes and reduced inflation. Find out why it worked, and whether it would work today.

Economies of Scale
Reducing cost per unit due to large size.

Monetarism
A definition of monetary policy and how it is different from fiscal policy.

Monopoly
Surprisingly, monopolies themselves aren't illegal. However, if they use their position to engage in price-fixing or other discriminatory activities, then they are subject to the Sherman Anti-Trust Act. Find out about monopolies in the U.S., then and now.

Profit
Definition of profit and why it is important to the US economy.

Supply-side Economics - What Is It and Does It Work?
Supply-side economics says that decreasing taxes is the best way to balance the budget and stimulate the economy. Studies give mixed reviews. Find out what supply-side economics is, how it works, and the pros and cons of this important theory.

Laffer Curve
The Laffer Curve is the theoretical underpinning for supply-side economics and much of the Republican tax cut policies. What does it really say and how does it work?

Trickle-Down Economics and Its Effects
Trickle Down Economics promises that a rising tide will float all boats. However, it hasn't really worked. Income inequality has worsened. Find out what trickle down economics really says, why it should work, and why it doesn't.

Deflation
Deflation is the flip side of inflation, because it's when prices fall. This seems like a good thing, but it actually has a depressing impact on the economy. Learn about deflation, how to recognize it, and whether it's a threat right now.

What are the Causes of Economic Inflation?
There are three main causes of inflation: demand-pull inflation, cost-push inflation and expansion of the money supply. Find out the conditions that create these causes, which causes are most common, and which ones you don't really have to worry about. Understand how these causes of inflation impact the economy and you.

Hyperinflation
Hyperinflation is when the inflation rate is in the double-digits -- per day! Find out the causes of hyperinflation, what hyperinflation was like in Germany, Zimbabwe and in America. Learn why hyperinflation probably will not occur in the U.S. again, and what you can do to survive, just in case.

Stagflation
Stagflation shouldn't happen, because the causes of inflation will usually drive economic growth -- and vice versa. Find out why stagflation did happen in the 1970s and in Japan.

Cost-Push Inflation
Cost-push inflation is created by many situations. Understand what they are, and find out some examples.

Demand-Pull Inflation
Demand-pull inflation is the most common cause of inflation. Find out exactly what it is, what leads to it, and some recent examples.

Command Economy
In a command economy, the government decides how resources are distributed.

Market Economy
A market economy relies on the forces of supply and demand to allocate resources.

Mixed Economy
The U.S. economy is now a mixed economy. Find out how this happened, and how the U.S. has many of the characteristics of market, command and traditional economies.

Labor Force Participation Rate Formula
What is the formula for the labor force participation rate?

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