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  • 8/2/2019 Theory. Sha



    Anti-classical or backing theory

    Another issue associated with classical political economy is the anti-classical hypothesis

    of money, or "backing theory". The backing theory argues that the value of money isdetermined by the assets and liabilities of the issuing agency. Unlike the QuantityTheory of classical political economy, the backing theory argues that issuing authoritiescan issue money without causing inflation so long as the money issuer has sufficientassets to cover redemptions. There are very few backing theorists, making quantitytheory the dominant theory explaining inflation.


    'Big-push' Theory

    This theory is an investment theory which stresses the conditions of take-off. Theargumentation is quite similar to the balanced growth theory but emphasis is put on theneed for a big push. The investments should be of a relatively high minimum in order toreap the benefits of external economies. Only investments in big complexes will result insocial benefits exceeding social costs. High priority is given to infrastructuraldevelopment and industry, and this emphasis will lead to governmental developmentplanning and influence.

    Binary economics

    Binary economics is a heterodox theory of economics that endorses both privateproperty and a free market but proposes significant reforms to the banking system. Theaim of binary economics is to ensure that all individuals receive income from their ownindependent capital estate, using interest-free loans issued by a central bank topromote the spread of employee-owned firms. These loans are intended to: halveinfrastructure improvement costs, reduce business startup costs, and widen stockownership.

    Bottom of the pyramid

    In economics, the bottom of the pyramid is the largest, but poorest socio-economicgroup. In global terms, this is the 2.5 billion people who live on less than $2.50 perday.[1]The phrase bottom of the pyramid is used in particular by people developingnew models of doing business that deliberately target that demographic, often usingnew technology. This field is also often referred to as the "Base of the Pyramid" or justthe "BoP".

    Buffer theory
  • 8/2/2019 Theory. Sha


    In the late 1950s a number of European countries (most notably West Germany andFrance) decided on a migration policy known as the Buffer theory.

    Owing to rapid economic recovery in the post WWII period (aided by the AmericanMarshall plan) there were many more job vacancies than people who were available or

    becoming available in the workforce to fill them. To resolve this situation they decided to"import" workers from the southern Mediterranean basin (including North Africa) on atemporary capacity to fill this labour shortfall.


    CalmforsDriffill hypothesis

    The CalmforsDriffill hypothesis is a macroeconomic theory in labour economics thatstates that there is a non-linear relationship between the degree of collective bargainingin an economy and the level of unemployment. Specifically, it states that the relationshipis roughly that of an 'inverted U': as trade union size increases from nil, unemploymentincreases, and then falls as unions begin to exercise monopoly power. It was advancedby Lars Calmfors and John Driffill in their 1988 paper Bargaining structure, corporatismand macroeconomic performance.

    The rationale is related to Mancur Olson's idea, from The Rise and Decline of Nations,that organised interests are at their most harmful when they do not internalise significantamounts of the costs they impose on society, but become less harmful as their interestbecomes encompassing enough to suffer the costs

    Causal decision theory

    Causal decision theory is a school of thought within decision theory which maintainsthat the expected utility of actions should be evaluated with respect to their potentialcausal consequences. It contrasts with evidential decision theory, which recommendsthose actions that, conditional on having been performed, will make the actor have thehappiest expectations about the outcome.

    Choice theory

    The term choice theoryis the work of William Glasser, MD, author of the book sonamed, and is the culmination of some 50 years of theory and practice in psychologyand counseling. Choice Theory posits that behavior is central to our existence and isdriven by five genetically driven needs, similar to those of Abraham Maslow:

    Survival(food, clothing, shelter, breathing, personal safety and others)

    And four fundamental psychological needs:
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    Belonging/connecting/love Power/significance/competence Freedom/autonomy, and Fun/learning

    Classical test theory

    Classical test theory is a body of related psychometric theory that predict outcomes ofpsychological testing such as the difficulty of items or the ability of test-takers. Generallyspeaking, the aim of classical test theory is to understand and improve the reliability ofpsychological tests.

    Classical theory of growth and stagnation

    Classical economics refers to work done by a group of economists in the eighteenth andnineteenth centuries. The theories developed mainly focused on the way marketeconomies functioned. Classical Economics study mainly concentrates on the dynamicsof economic growth.

    The generalized classical theory on growth and stagnation is a combination of thecontributions of Adam Smith, David Ricardo and Robert Malthus. The theory was puttogether by combining the common stands of thought, within the individual growththeories, of these renowned classical economists. To understand the generalizedclassical theory of growth and stagnation, let us first look into the individual theoriespropagated by each of the three economists in detail.

    Cluster theory

    Cluster theory is a theory of strategy.

    Alfred Marshall, in his book Principles of Economics, published in 1890, firstcharacterised clusters as a "concentration of specialised industries in particularlocalities" that he termed industrial districts.

    Coasian solution

    A Coasian Solution, named after the economist Ronald Coase, is an economicssolution resulting from the use of the Coase Theorem to achieve economic efficiency inthe presence of externalities without government intervention..

    Cobweb model

    The cobweb model or cobweb theory is an economic model that explains why pricesmight be subject to periodic fluctuations in certain types of markets. It describes cyclicalsupply and demand in a market where the amount produced must be chosen before