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Adam Smith represents classical, Alfred Marshal represents the neo-classical school of thoughts and the moderns are represented by Lionel Robbins.
Adam smith (1723-1790) who is known as a father of economics, in his work "An enquiry into the causes and nature of wealth of nations" defined economics first time in 1776. He, defining economics said that:
The above mentioned book of Smith has been divided into four parts. Consumption, production, exchange and distribution of wealth. He came up with an opinion that the wealth, goods and services are produced in every country in accordance with the laws. Concerning the exchange and with regard to distribution of wealth, he developed some laws for mutual exchange and with regard to distribution of wealth. The concept of wealth given by Smith was misinterpreted as well as misunderstood therefore, Ruskin and Carlyle, the renowned social reformers of their own time, declared economics a dismal (negative) branch of knowledge. They said that Smith’s definition motivates the people for "wealth worship and make them selfish". Wealth is the mean to reach the end not the end in itself. After the criticism of Ruskin and Carlyle on Smith’s theory Alfred Marshall came into play and rectifying many faults and defined economics in a different way. He said: "Economy is the study of man’s action in the ordinary business of life. It enquires, how does he get his income and how does he use it. More precisely, "Economics tells how to earn money and how to consume it" (Heather, 2000)
Prof. Robbins developed a new definition of economics. As per him:
"Economics is the study of human behavior as a relationship between ends and scarce means which have alternative uses". There are three pillars of Robin’s theory which help it to sustain and be considered. These pillars are mentioned below.
Wants are unlimited and so they compel us to select very urgent wants for having maximum satisfaction.
The means, to satisfy these unlimited wants, are limited and create the problem of scarcity.
As the means can be used alternatively, a new problem of choice is created. Let’s understand this concept with an example: suppose a buyer reaches the market with limited money in his pocket to purchase, then he faces the problem of choice. In other words, he has to take a decision what to purchase and what not to (Harvey 1996)
Economic Levers
There are a number of economic levers which can be used to keep the economy back on track. We will discuss some of them and analyze that how it helps to aid the economy (Alois &amp. Perelman, 1994).
1. Deflation
2. Devaluation
3. Price Trend
4. Nationalization
5. Liquidity Preference
6. Fiscal policy
7. Rate of interest
8. Employment rate
9. Global Trade.
1. Deflation:
When a decrease in the prices of the commodities and goods occur then we can