Classical Economics: Focuses on free markets and self-regulation. Applications include how economies recover without government intervention, with examples in trade and business cycles. The emphasis is on supply and demand, market equilibrium, and the “invisible hand” theory proposed by Adam Smith.
Keynesian Economics: Advocates for government intervention during recessions to boost demand. This theory has been applied in various fiscal stimulus packages, such as the New Deal in the 1930s or economic recovery efforts following the 2008 financial crisis.
Supply-Side Economics: Focuses on boosting production through tax cuts and deregulation. Supply-side policies have been implemented in the U.S. under Ronald Reagan and George W. Bush, with an emphasis on stimulating business investment.
Institutional Economics: Examines the role of social, legal, and political institutions in shaping economic outcomes. The theory is applied in understanding the impact of legal frameworks and governance on economic development in various countries.
Behavioral Economics: Explores how psychological factors influence economic decision-making. Applications include the use of “nudges” in public policy to encourage better savings behavior or healthier lifestyle choices.
