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Resources › Theories and theorists
Economics · Reference

Theories and their theorists

147 pairings, from the law of demand to new trade theory, each with its year and a line on what it says. Where credit is shared, the entry says so.

In this guide
Reference · dip in, or 20 minutes with the drill
  1. How the questions are set
  2. The full list
  3. Who did what
  4. Match-the-list drill
  5. Check yourself
01
The pattern

How the questions are set

Almost every question on this topic is a four-by-four “match List I with List II”, and almost every one draws its four pairs from one field: four consumption theories, four trade-cycle theories, four development economists. Learn the list field by field and the distractors fall away, because the wrong options are always people from the same field.

14Consumer & demand
16Production & markets
10Rent, wages, profit
15Games, information, behaviour
13Public finance
8Finance
15Consumption & investment
15Money & expectations
9Business cycles
21Growth & development
11Trade
Two answers for one theory

When two people share the credit, the paper gives you only one of them. Kinked demand is Sweezy or Hall and Hitch; the multiplier is Kahn for employment and Keynes for investment; the cobweb is Schultz, Tinbergen or Kaldor, depending on the setter. Read all four options before you commit.

02
Reference

The full list

147 pairings
  1. Law of demand
    Consumer & demand
    Alfred Marshall1890
    Other things equal, quantity demanded falls as price rises. Stated in Principles of Economics.
  2. Marginal utility theory
    Consumer & demand
    W. S. Jevons, with Carl Menger and Léon Walras1871
    Value comes from the utility of the last unit consumed, not from labour cost. The start of the marginal revolution.
    Gossen had stated the laws of utility in 1854.
  3. Cardinal utility approach
    Consumer & demand
    Alfred Marshall
    Utility is measurable in units (money as the measuring rod); equilibrium where MU of each good equals its price times the MU of money.
  4. Ordinal utility (indifference-curve) theory
    Consumer & demand
    J. R. Hicks and R. G. D. Allen1934
    Consumers only rank bundles. Set out in 'A Reconsideration of the Theory of Value' (Economica, 1934).
  5. Revealed preference theory
    Consumer & demand
    Paul Samuelson1938
    Infer preferences from observed choices, with no appeal to utility. The weak axiom of revealed preference.
  6. Consumer surplus
    Consumer & demand
    Alfred Marshall1890
    What a buyer would pay minus what they do pay; the area under demand above price.
    Jules Dupuit had the idea in 1844; Marshall named and popularised it.
  7. Indifference curve
    Consumer & demand
    F. Y. Edgeworth1881
    First drawn in Mathematical Psychics. Pareto developed it (1906) and Hicks and Allen built consumer theory on it.
  8. Compensated (Hicksian) demand curve
    Consumer & demand
    J. R. Hicks1939
    Demand with income adjusted to hold utility constant, so it shows the substitution effect alone. Value and Capital.
  9. Uncompensated (Marshallian) demand curve
    Consumer & demand
    Alfred Marshall
    Ordinary demand with money income fixed: shows substitution and income effects together.
  10. Economics as “a study of wealth” on one side and “a part of the study of man” on the other
    Consumer & demand
    Alfred Marshall1890
    Marshall's welfare definition: economics “is on the one side a study of wealth; and on the other, and more important side, a part of the study of man.”
    This is the “one side … other side” sentence in Marshall's definition of economics in the Principles; the wording is not a standard theory name.
  11. Slutsky equation (substitution and income effects)Past paper
    Consumer & demand
    Eugen Slutsky1915
    Splits a price effect into a substitution effect and an income effect. Hicks later gave a different compensation.
  12. Engel's lawPast paper
    Consumer & demand
    Ernst Engel1857
    As income rises, the share spent on food falls.
  13. Conspicuous consumption (Veblen effect)Past paper
    Consumer & demand
    Thorstein Veblen1899
    Some goods are wanted because they are expensive. The Theory of the Leisure Class.
  14. Bandwagon, snob and Veblen effectsPast paper
    Consumer & demand
    Harvey Leibenstein1950
    Demand that depends on how many others buy. Leibenstein's QJE paper classified the three effects.
  15. Law of diminishing returns
    Production & markets
    David Ricardo (with Malthus, West and Torrens)1815
    Adding a variable input to a fixed one eventually raises output by less and less. Ricardo built rent and distribution on it.
    Turgot stated it first (1767). In 1815 Ricardo, Malthus, Edward West and Robert Torrens all applied it to land.
  16. Isoquant
    Production & markets
    Ragnar Frisch (the term)
    A curve of input combinations giving the same output: the producer's counterpart of an indifference curve.
    The word is Ragnar Frisch's. The device itself was worked out independently by several economists in the 1920s and 1930s, among them A. L. Bowley and Abba Lerner. It is not Hicks's.
  17. Monopolistic competition
    Production & markets
    Edward Chamberlin1933
    Many sellers of differentiated products; the tangency solution with excess capacity. The Theory of Monopolistic Competition.
  18. Imperfect competition
    Production & markets
    Joan Robinson1933
    The Economics of Imperfect Competition, the same year as Chamberlin. Also introduced price discrimination analysis in its modern form.
  19. Monopsony
    Production & markets
    Joan Robinson1933
    A single buyer, such as a sole employer, pays labour less than its marginal revenue product. Robinson credited the word to B. L. Hallward.
  20. Kinked demand curve
    Production & markets
    Paul Sweezy; also Hall and Hitch1939
    Rivals follow a price cut but not a rise, so oligopoly prices are sticky.
  21. Cobweb theorem
    Production & markets
    Henry Schultz, Jan Tinbergen and Umberto Ricci; named by Kaldor1930
    Supply responds to last period's price, so price and quantity oscillate; they converge only if supply is less elastic than demand.
    The model came from Schultz, Tinbergen and Ricci in 1930; Kaldor gave it the name in 1934. Mordecai Ezekiel's 'The Cobweb Theorem' (1938) is the classic statement.
  22. Duopoly modelPast paper
    Production & markets
    Augustin Cournot1838
    Two firms choose quantities, each taking the other's output as given. (UGC NET June 2026.)
  23. Price competition duopolyPast paper
    Production & markets
    Joseph Bertrand1883
    Firms choose prices; with identical products price falls to marginal cost.
  24. Leader–follower duopolyPast paper
    Production & markets
    Heinrich von Stackelberg1934
    The leader moves first and gains from it. Stackelberg also wrote The Theory of the Market Economy (CUET 2025).
  25. Full-cost pricingPast paper
    Production & markets
    R. L. Hall and C. J. Hitch1939
    Oxford survey: firms set price as average cost plus a mark-up, not by MR = MC. (UGC NET 2024, 2026.)
  26. Limit pricingPast paper
    Production & markets
    Joe S. Bain1949
    Incumbents price below the monopoly level to deter entry. Developed further by Sylos-Labini and Modigliani. (UGC NET June 2026.)
  27. Sales-revenue maximisationPast paper
    Production & markets
    W. J. Baumol1959
    Managers maximise revenue subject to a minimum profit constraint.
  28. Partial equilibrium analysisPast paper
    Production & markets
    Alfred Marshall
    One market at a time, other things equal. General equilibrium is Walras's (1874). (UoH 2018.)
  29. Industrial district (localised external economies)Past paper
    Production & markets
    Alfred Marshall1890
    Firms clustered in one place share skilled labour, suppliers and ideas: “the mysteries of the trade become no mysteries”. (CUET 2022.)
  30. Edgeworth boxPast paper
    Production & markets
    Edgeworth's contract curve (1881); the box first drawn by Pareto (1906)
    Two people, two goods, all allocations in one box; efficient points lie on the contract curve. Bowley popularised it in 1924.
    The box in its familiar form first appears in Pareto's Manual (1906); Bowley popularised it in 1924.
  31. Theory of rent (differential rent)
    Rent, wages, profit
    David Ricardo1817
    Rent is paid for “the original and indestructible powers of the soil”, and arises from differences in fertility as poorer land is brought in.
  32. Modern theory of rentPast paper
    Rent, wages, profit
    Joan Robinson
    Rent is any factor's earning above its transfer earnings, not just land's. (UGC NET June 2024 key.)
  33. Marginal productivity theory of distribution
    Rent, wages, profit
    J. B. Clark, with P. H. Wicksteed1899
    Each factor is paid its marginal product. Clark's The Distribution of Wealth; Wicksteed's Co-ordination of the Laws of Distribution (1894).
  34. Product exhaustion theorem (adding-up problem)Past paper
    Rent, wages, profit
    A. W. Flux (posed by Wicksteed)1894
    Under constant returns, paying every factor its marginal product exactly uses up the output: Euler's theorem. (UGC NET June 2026.)
  35. Iron law of wages
    Rent, wages, profit
    Ferdinand Lassalle1860s
    Wages always tend to subsistence, because higher wages bring more people.
    The phrase is Lassalle's. The idea behind it is the classical subsistence theory of wages of Ricardo and Malthus.
  36. Wages fund theoryPast paper
    Rent, wages, profit
    J. S. Mill
    Wages are a fixed fund divided by the number of workers. Mill recanted it in 1869.
  37. Degree-of-monopoly theory of distributionPast paper
    Rent, wages, profit
    Michał Kalecki
    Labour's share falls as firms' mark-ups rise. (UGC NET June 2024.)
  38. Profit as the rent of abilityPast paper
    Rent, wages, profit
    F. A. Walker
    Profit is to the able entrepreneur what rent is to good land. (UGC NET June 2024, “theory of profit”.)
  39. Uncertainty-bearing theory of profitPast paper
    Rent, wages, profit
    Frank Knight1921
    Profit rewards uninsurable uncertainty, not measurable risk. Risk, Uncertainty and Profit (CUET 2025).
  40. Innovation theory of profitPast paper
    Rent, wages, profit
    Joseph Schumpeter1911
    Profit is the temporary reward to the innovator, competed away by imitators.
  41. Prisoner's dilemma
    Games, information, behaviour
    Merrill Flood and Melvin Dresher; named by Albert Tucker1950
    Each player's dominant strategy leads to an outcome both would rather avoid.
    Flood and Dresher ran the game at RAND in 1950; Tucker gave it the prison story and the name.
  42. Nash equilibriumPast paper
    Games, information, behaviour
    John Nash1950
    No player gains by changing strategy alone. Every finite game has one in mixed strategies.
  43. Subgame perfect equilibrium
    Games, information, behaviour
    Reinhard Selten1965
    A Nash equilibrium in every subgame; rules out non-credible threats. Found by backward induction.
  44. Expected utility theory (choice under uncertainty)Past paper
    Games, information, behaviour
    John von Neumann and Oskar Morgenstern1944
    Theory of Games and Economic Behavior, which also founded game theory. UGC NET June 2026 called it “uncertainty theory”.
  45. Prospect theory and loss aversion
    Games, information, behaviour
    Daniel Kahneman and Amos Tversky1979
    Outcomes are judged as gains or losses from a reference point, and losses weigh more than equal gains.
  46. Nudge theory
    Games, information, behaviour
    Richard Thaler and Cass Sunstein2008
    Change the choice architecture, such as defaults, without forbidding options. The book Nudge.
  47. Bounded rationality and satisficingPast paper
    Games, information, behaviour
    Herbert Simon1955
    People and firms settle for “good enough” because information and computation are costly.
  48. Adverse selection (market for lemons)
    Games, information, behaviour
    George Akerlof1970
    Hidden quality drives good goods out of the market.
  49. Moral hazard
    Games, information, behaviour
    Kenneth Arrow1963
    Insurance changes hidden behaviour. Arrow's 'Uncertainty and the Welfare Economics of Medical Care'; the term came from insurance practice.
  50. Signalling
    Games, information, behaviour
    Michael Spence1973
    The informed side takes a costly action, such as education, that only high types find worth it.
    Stephen Ross applied signalling to corporate finance in 1977, showing that debt can signal a firm's quality.
  51. ScreeningPast paper
    Games, information, behaviour
    Joseph Stiglitz (with Michael Rothschild)1976
    The uninformed side offers a menu, such as insurance contracts, that makes types sort themselves.
  52. Principal–agent (agency) theory
    Games, information, behaviour
    Michael Jensen and William Meckling1976
    Agency costs when owners (principals) hire managers (agents) whose interests differ. 'Theory of the Firm', JFE.
    Stephen Ross (1973) had already written on the principal's problem.
  53. Coase theoremPast paper
    Games, information, behaviour
    Ronald Coase1960
    With clear property rights and no transaction costs, bargaining reaches the efficient outcome whoever holds the right. 'The Problem of Social Cost'.
  54. Impossibility theoremPast paper
    Games, information, behaviour
    Kenneth Arrow1951
    No rule for aggregating individual rankings satisfies all of a few reasonable conditions at once. Social Choice and Individual Values.
  55. Capability approach; entitlementsPast paper
    Games, information, behaviour
    Amartya Sen
    Judge well-being by what people are able to do and be. Famines as entitlement failures (Poverty and Famines, 1981). (UGC NET Dec 2025.)
  56. Canons of taxation
    Public finance
    Adam Smith1776
    Equality, certainty, convenience and economy. Wealth of Nations, Book V.
  57. Canons of public expenditure
    Public finance
    G. Findlay Shirras
    Benefit, economy, sanction and surplus. Science of Public Finance.
  58. Functional finance
    Public finance
    Abba Lerner1943
    Judge a budget by its effect on the economy, not by whether it balances.
  59. Principle of maximum social advantagePast paper
    Public finance
    Hugh Dalton1922
    Tax and spend until the marginal social sacrifice of taxes equals the marginal social benefit of spending. Principles of Public Finance. (CUET 2022, UGC NET 2026.)
  60. Differential incidencePast paper
    Public finance
    Richard Musgrave1959
    Compare two taxes raising the same revenue, with spending held fixed. Musgrave's The Theory of Public Finance, which also set out the three branches: allocation, distribution, stabilisation. (CUET 2022.)
  61. Optimal commodity taxation (Ramsey rule)Past paper
    Public finance
    Frank Ramsey1927
    Tax goods so that each reduces demand in the same proportion, which roughly means taxing inelastic goods more.
    Ramsey's 1927 paper is about commodity taxes. Optimal income taxation is James Mirrlees's (1971).
  62. Zero-based budgetingPast paper
    Public finance
    Peter Pyhrr1970
    Every item is justified from zero each year, not from last year's base. Developed at Texas Instruments. (UGC NET June 2026.)
  63. Law of increasing state activityPast paper
    Public finance
    Adolph Wagner
    Public spending grows faster than national income as an economy industrialises.
  64. Displacement effectPast paper
    Public finance
    Alan Peacock and Jack Wiseman1961
    Public spending jumps in crises such as wars and does not fall back fully afterwards.
  65. Pure theory of public expenditure (public goods)Past paper
    Public finance
    Paul Samuelson1954
    For a public good, the sum of marginal benefits across people should equal marginal cost.
  66. Voting with the feetPast paper
    Public finance
    Charles Tiebout1956
    People sort into local jurisdictions by the tax-and-services package they prefer.
  67. Laffer curve; supply-side economicsPast paper
    Public finance
    Arthur Laffer
    Past some rate, higher tax rates bring in less revenue. (CUET 2022.)
  68. Corrective tax on externalitiesPast paper
    Public finance
    A. C. Pigou1920
    Tax an activity by its marginal external cost. The Economics of Welfare.
  69. Modern portfolio theory
    Finance
    Harry Markowitz1952
    Choose portfolios by mean and variance; diversification lowers risk. 'Portfolio Selection', Journal of Finance.
  70. Capital asset pricing model (CAPM)
    Finance
    William Sharpe, with John Lintner and Jan Mossin1964
    An asset's expected return rises with its beta, its risk that cannot be diversified away.
  71. Arbitrage pricing theory
    Finance
    Stephen Ross1976
    Expected return depends on exposure to several macro factors; rests on no arbitrage, not on a market portfolio.
  72. Random walk hypothesis
    Finance
    Paul Samuelson; Louis Bachelier before him1965
    Price changes are unpredictable. Samuelson's 'Proof that Properly Anticipated Prices Fluctuate Randomly'.
    Louis Bachelier's thesis (1900) first modelled prices as a random walk; Maurice Kendall found it in the data (1953).
  73. Efficient market hypothesis
    Finance
    Eugene Fama1970
    Prices reflect available information; weak, semi-strong and strong forms.
  74. Capital structure irrelevancePast paper
    Finance
    Franco Modigliani and Merton Miller1958
    Without taxes and frictions, a firm's value does not depend on its mix of debt and equity.
  75. Credit rationing
    Finance
    Joseph Stiglitz and Andrew Weiss1981
    Banks refuse loans rather than raise the rate, because higher rates attract riskier borrowers.
  76. Microfinance; group lending
    Finance
    Muhammad Yunus1983
    Small collateral-free loans to the poor, with group liability. Grameen Bank, Bangladesh; Nobel Peace Prize 2006, shared with the bank.
  77. Absolute income hypothesis
    Consumption & investment
    J. M. Keynes1936
    Consumption depends on current income; MPC between 0 and 1 and APC falling as income rises.
  78. Relative income hypothesis
    Consumption & investment
    James Duesenberry1949
    Consumption depends on income relative to others (the demonstration effect) and to one's own past peak.
  79. Ratchet effectPast paper
    Consumption & investment
    James Duesenberry1949
    Consumption does not fall back when income falls, because habits formed at the peak persist. (UGC NET June 2026.)
  80. Permanent income hypothesis
    Consumption & investment
    Milton Friedman1957
    Consumption depends on long-run expected income; windfalls are mostly saved. A Theory of the Consumption Function.
  81. Life-cycle hypothesis
    Consumption & investment
    Franco Modigliani (with Richard Brumberg and Albert Ando)1954
    People save while working and dissave in retirement, smoothing consumption over a lifetime.
  82. Drift theory of consumptionPast paper
    Consumption & investment
    Arthur Smithies and James Tobin
    The short-run consumption function drifts upward over time, reconciling the budget studies with Kuznets's stable long-run ratio. (UGC NET June 2026.)
  83. Intertemporal consumption modelPast paper
    Consumption & investment
    Irving Fisher1930
    Choose consumption today and tomorrow subject to a budget line set by the interest rate. The Theory of Interest. (CUET 2022.)
  84. Employment multiplier
    Consumption & investment
    R. F. Kahn1931
    Kahn's 'The Relation of Home Investment to Unemployment': primary jobs create secondary ones.
    The employment multiplier is Kahn's (1931); the investment (income) multiplier is Keynes's (1936).
  85. Investment multiplierPast paper
    Consumption & investment
    J. M. Keynes1936
    ΔY = ΔI / (1 − MPC). The General Theory.
  86. Accelerator principle
    Consumption & investment
    J. M. Clark1917
    Investment depends on the change in output, not its level.
  87. Marginal efficiency of capitalPast paper
    Consumption & investment
    J. M. Keynes1936
    The discount rate that makes an asset's expected returns equal its supply price; invest while MEC exceeds the interest rate.
  88. Neoclassical theory of investmentPast paper
    Consumption & investment
    Dale Jorgenson1963
    Firms invest toward a desired capital stock set by the user cost of capital. (CUET 2023.)
  89. q theory of investmentPast paper
    Consumption & investment
    James Tobin1969
    Invest when the market value of capital exceeds its replacement cost (q > 1).
  90. Paradox of thriftPast paper
    Consumption & investment
    J. M. Keynes1936
    If everyone tries to save more, income falls and total saving may not rise. Mandeville's Fable of the Bees had the idea earlier.
  91. Say's law of marketsPast paper
    Consumption & investment
    J.-B. Say1803
    “Supply creates its own demand”, in Keynes's summary of it. No general glut is possible. (CUET 2024, 2026.)
  92. Quantity theory of money (equation of exchange, MV = PT)
    Money & expectations
    Irving Fisher1911
    The Purchasing Power of Money: with V and T fixed, prices move in proportion to money.
    Fisher's is the transactions version. The quantity theory itself is older: Bodin, Locke and Hume all stated it.
  93. Cambridge cash-balance approach (M = kPY)
    Money & expectations
    Alfred Marshall and A. C. Pigou1917
    People want to hold a fraction k of income as money. Pigou's 'The Value of Money' (1917) formalised Marshall's teaching; Robertson and Keynes followed.
  94. Liquidity preference theory of interestPast paper
    Money & expectations
    J. M. Keynes1936
    Interest is the reward for parting with liquidity; money is held for transactions, precaution and speculation.
  95. Restatement of the quantity theory (modern QTM)Past paper
    Money & expectations
    Milton Friedman1956
    The quantity theory recast as a stable demand for money. (CUET 2022, UGC NET June 2026.)
  96. Inventory-theoretic demand for moneyPast paper
    Money & expectations
    W. J. Baumol (1952); James Tobin (1956)1952
    Transactions money is an inventory: holdings rise with the square root of income and fall with the interest rate. (UGC NET June 2026 keyed Baumol.)
  97. Portfolio theory of the demand for money (liquidity preference as behaviour towards risk)Past paper
    Money & expectations
    James Tobin1958
    Risk-averse investors hold some money to lower portfolio risk. (UGC NET June 2026.)
  98. Money illusion
    Money & expectations
    Irving Fisher1928
    Thinking in nominal rather than real terms. Fisher's book The Money Illusion.
  99. Fisher effectPast paper
    Money & expectations
    Irving Fisher
    Nominal interest = real interest + expected inflation.
  100. Phillips curve
    Money & expectations
    A. W. Phillips1958
    UK money-wage growth against unemployment, 1861–1957. Samuelson and Solow (1960) recast it with price inflation.
  101. Expectations-augmented Phillips curve; natural rate of unemployment
    Money & expectations
    Milton Friedman and Edmund Phelps1968
    The trade-off holds only while expectations lag; in the long run the curve is vertical at the natural rate.
  102. Adaptive expectations
    Money & expectations
    Phillip Cagan; Milton Friedman1956
    Expectations are revised by a fraction of the last error. Cagan used it for hyperinflations (1956), Friedman for permanent income (1957).
  103. Rational expectations
    Money & expectations
    John Muth1961
    Expectations equal the model's own prediction; errors are not systematic. Lucas and Sargent brought it into macroeconomics.
  104. Lucas critiquePast paper
    Money & expectations
    Robert Lucas1976
    Relations estimated under one policy break when the policy changes, because expectations change.
  105. Okun's lawPast paper
    Money & expectations
    Arthur Okun1962
    Each point of unemployment above its natural rate goes with a loss of output of a few per cent; Okun's own estimate was about three.
  106. Taylor rulePast paper
    Money & expectations
    John Taylor1993
    The policy rate responds to the inflation gap and the output gap.
  107. Innovation theory of the trade cycle
    Business cycles
    Joseph Schumpeter1939
    Clusters of innovation bring booms; adjustment brings the downturn. Business Cycles (1939).
  108. Creative destruction
    Business cycles
    Joseph Schumpeter1942
    New products and methods destroy old ones; the essential fact about capitalism. Capitalism, Socialism and Democracy.
  109. Entrepreneur as innovator
    Business cycles
    Joseph Schumpeter1911
    The Theory of Economic Development: the entrepreneur carries out “new combinations” and breaks the circular flow.
    Schumpeter's is the innovation theory. Others: Cantillon (the risk-taker), Knight (the bearer of uncertainty) and Kirzner (the alert arbitrageur).
  110. Purely monetary theory of the trade cyclePast paper
    Business cycles
    R. G. Hawtrey
    Cycles come from expansions and contractions of bank credit. (UGC NET Dec 2025.)
  111. Monetary over-investment theoryPast paper
    Business cycles
    F. A. Hayek1931
    Credit pushes the interest rate below its natural level, so too much goes into long processes of production. Prices and Production. (UGC NET June 2026.)
  112. Psychological theory of the trade cyclePast paper
    Business cycles
    A. C. Pigou
    Waves of optimism and pessimism among businessmen drive the cycle. Industrial Fluctuations (1927). (UGC NET June 2026.)
  113. Multiplier–accelerator interactionPast paper
    Business cycles
    Paul Samuelson1939
    Combining the two produces cycles from a single shock. Hicks built a full trade-cycle model on it (1950). (UGC NET 2025, 2026; CUET 2023.)
  114. Real business cycle theory
    Business cycles
    Finn Kydland and Edward Prescott1982
    Cycles are the optimal response to real shocks, mainly to technology. 'Time to Build and Aggregate Fluctuations'.
  115. Secular stagnation
    Business cycles
    Alvin Hansen1938
    Slowing population growth and technical change leave too few investment outlets. Revived by Larry Summers in 2013.
  116. Harrod–Domar growth modelPast paper
    Growth & development
    Roy Harrod and Evsey Domar1939
    Growth = saving rate ÷ capital–output ratio; the warranted rate is a knife edge. Harrod 1939, Domar 1946.
  117. Neoclassical growth model
    Growth & development
    Robert Solow and Trevor Swan; James Meade1956
    Diminishing returns to capital give a steady state; long-run growth per head comes only from exogenous technical progress.
    Meade's A Neo-Classical Theory of Economic Growth (1961) belongs to the same family.
  118. Endogenous growth theory
    Growth & development
    Paul Romer and Robert Lucas1986
    Growth comes from inside the model: ideas and human capital with non-diminishing returns. Romer 1986 and 1990, Lucas 1988.
    Arrow's learning by doing (1962) and Barro's public-spending model (1990) are counted in the family.
  119. AK model
    Growth & development
    Marvin Frankel (1962); Sergio Rebelo (1991)1962
    Y = AK: constant returns to broad capital, so saving raises growth permanently.
  120. Human capital theory
    Growth & development
    Gary Becker; T. W. Schultz1964
    Education and training are investments with returns. Becker's Human Capital (1964); Schultz's 'Investment in Human Capital' (1961); Mincer's earnings equation.
    Schultz (1961) and Jacob Mincer (1958) came first; Becker's book systematised it.
  121. Stages of economic growth
    Growth & development
    W. W. Rostow1960
    Traditional society, preconditions for take-off, take-off, drive to maturity, age of high mass consumption.
  122. Vicious circle of poverty
    Growth & development
    Ragnar Nurkse1953
    “A country is poor because it is poor”: low income, low saving, low investment, low income. (CUET 2022.)
  123. Balanced growth
    Growth & development
    Ragnar Nurkse; Paul Rosenstein-Rodan1953
    Invest across many industries at once so that each creates a market for the others. (UGC NET June 2023.)
  124. Big push
    Growth & development
    Paul Rosenstein-Rodan1943
    Indivisibilities in infrastructure, demand and saving need a large minimum investment. (UGC NET June 2026 tested “Big Push is Ricardo's” as false.)
  125. Unbalanced growth
    Growth & development
    Albert Hirschman; also Hans Singer1958
    Deliberately invest in key sectors with strong forward and backward linkages; the shortages pull in the rest. The Strategy of Economic Development.
  126. Critical minimum effort thesis
    Growth & development
    Harvey Leibenstein1957
    A backward economy needs a push above a critical minimum so that income-raising forces beat income-depressing ones. Economic Backwardness and Economic Growth.
  127. Development with unlimited supplies of labour (dual-sector model)Past paper
    Growth & development
    W. Arthur Lewis1954
    Surplus farm labour with near-zero marginal product moves to industry at a constant wage until the surplus is used up. (CUET 2022, UoH 2015, UGC NET 2026.)
  128. Fei–Ranis modelPast paper
    Growth & development
    John Fei and Gustav Ranis1961
    Extends Lewis with three phases and a role for farm productivity.
  129. Rural–urban migration modelPast paper
    Growth & development
    John Harris and Michael Todaro1970
    People migrate on expected urban income, so urban unemployment can coexist with migration. Todaro 1969, Harris–Todaro 1970.
  130. Social dualism
    Growth & development
    J. H. Boeke1953
    An imported capitalist system beside a pre-capitalist one, each with its own logic. From his study of Indonesia; Economics and Economic Policy of Dual Societies.
  131. Circular and cumulative causation; backwash and spread effects
    Growth & development
    Gunnar Myrdal1957
    Once a region gets ahead, market forces widen the gap. Economic Theory and Under-developed Regions. (UGC NET Dec 2025.)
  132. Asian Drama; the soft statePast paper
    Growth & development
    Gunnar Myrdal1968
    A three-volume study of poverty in South Asia. (CUET 2022.)
  133. Inverted-U hypothesisPast paper
    Growth & development
    Simon Kuznets1955
    Inequality first rises and then falls as income grows. (UGC NET 2023, 2025.)
  134. Two-gap modelPast paper
    Growth & development
    Hollis Chenery and Alan Strout1966
    Growth is held back by the larger of the saving gap and the foreign-exchange gap; aid fills it.
  135. Inclusive and extractive institutions
    Growth & development
    Daron Acemoglu and James Robinson2012
    Nations prosper under institutions that spread power and opportunity. Why Nations Fail; Nobel 2024, shared by Acemoglu, Simon Johnson and Robinson.
  136. Theory of populationPast paper
    Growth & development
    T. R. Malthus1798
    Population grows geometrically, food arithmetically; positive and preventive checks. An Essay on the Principle of Population.
  137. Absolute advantage
    Trade
    Adam Smith1776
    Each country exports what it produces at lower absolute cost.
  138. Comparative advantage
    Trade
    David Ricardo1817
    Trade pays even when one country is better at everything: England's cloth and Portugal's wine. (CUET 2019, UGC NET June 2026.)
  139. Infant industry argument
    Trade
    Friedrich List1841
    Temporary protection lets young industries grow until they can compete. The National System of Political Economy.
    Alexander Hamilton made the case in his Report on Manufactures (1791), and J. S. Mill accepted it.
  140. Factor endowment theory (Heckscher–Ohlin)Past paper
    Trade
    Eli Heckscher and Bertil Ohlin1933
    Countries export goods that use their abundant factor intensively. Heckscher 1919, Ohlin 1933.
  141. Leontief paradoxPast paper
    Trade
    Wassily Leontief1953
    US exports turned out more labour-intensive than its imports, against Heckscher–Ohlin.
  142. Stolper–Samuelson theoremPast paper
    Trade
    Wolfgang Stolper and Paul Samuelson1941
    A rise in a good's price raises the real return of the factor it uses intensively.
  143. Rybczynski theoremPast paper
    Trade
    T. M. Rybczynski1955
    At fixed prices, more of one factor raises output of the good using it intensively and lowers the other.
  144. Declining terms of trade for primary exportersPast paper
    Trade
    Raúl Prebisch and Hans Singer1950
    Prices of primary goods tend to fall relative to manufactures.
  145. New trade theory
    Trade
    Paul Krugman1979
    Scale economies and love of variety explain trade between similar countries; the new economic geography followed (1991). Nobel 2008. (UGC NET Dec 2025.)
  146. Marshall–Lerner conditionPast paper
    Trade
    Alfred Marshall and Abba Lerner
    A devaluation improves the trade balance if the export and import demand elasticities sum to more than one.
  147. Mundell–Fleming modelPast paper
    Trade
    Robert Mundell and Marcus Fleming1962
    IS–LM for an open economy: with free capital flows, monetary policy works under floating rates and fiscal policy under fixed rates.
03
By name

Who did what

Some names come up again and again. Setters often put two of the same person’s ideas in one list and leave you to split them: Duesenberry has both the relative income hypothesis and the ratchet effect, Tobin both q and the portfolio demand for money.

Alfred Marshall9
  • Law of demand1890
  • Cardinal utility approach
  • Consumer surplus1890
  • Uncompensated (Marshallian) demand curve
  • Economics as “a study of wealth” on one side and “a part of the study of man” on the other1890
  • Partial equilibrium analysis
  • Industrial district (localised external economies)1890
  • Cambridge cash-balance approach (M = kPY)1917
  • Marshall–Lerner condition
J. M. Keynes5
  • Absolute income hypothesis1936
  • Investment multiplier1936
  • Marginal efficiency of capital1936
  • Paradox of thrift1936
  • Liquidity preference theory of interest1936
Paul Samuelson5
  • Revealed preference theory1938
  • Pure theory of public expenditure (public goods)1954
  • Random walk hypothesis1965
  • Multiplier–accelerator interaction1939
  • Stolper–Samuelson theorem1941
David Ricardo4
  • Law of diminishing returns1815
  • Theory of rent (differential rent)1817
  • Iron law of wages1860s
  • Comparative advantage1817
Irving Fisher4
  • Intertemporal consumption model1930
  • Quantity theory of money (equation of exchange, MV = PT)1911
  • Money illusion1928
  • Fisher effect
James Tobin4
  • Drift theory of consumption
  • q theory of investment1969
  • Inventory-theoretic demand for money1952
  • Portfolio theory of the demand for money (liquidity preference as behaviour towards risk)1958
Joseph Schumpeter4
  • Innovation theory of profit1911
  • Innovation theory of the trade cycle1939
  • Creative destruction1942
  • Entrepreneur as innovator1911
Milton Friedman4
  • Permanent income hypothesis1957
  • Restatement of the quantity theory (modern QTM)1956
  • Expectations-augmented Phillips curve; natural rate of unemployment1968
  • Adaptive expectations1956
A. C. Pigou3
  • Corrective tax on externalities1920
  • Cambridge cash-balance approach (M = kPY)1917
  • Psychological theory of the trade cycle
Joan Robinson3
  • Imperfect competition1933
  • Monopsony1933
  • Modern theory of rent
Watch out for

The mistakes examiners are fishing for

  • Schumpeter has three separate entries: the innovating entrepreneur (1911), the innovation theory of the cycle (1939) and creative destruction (1942). UGC NET Dec 2025 offered the innovation theory against Jorgenson’s name as a false statement.
  • Two Robinsons. Joan Robinson (imperfect competition, monopsony, the modern theory of rent) and James Robinson (Why Nations Fail, with Acemoglu).
  • Two Clarks. J. B. Clark gave marginal productivity (1899); his son J. M. Clark gave the accelerator (1917).
  • Nurkse and Rosenstein-Rodan are both balanced growth, but the big push is Rosenstein-Rodan’s alone, and the vicious circle of poverty Nurkse’s alone.
04
Interactive

Match-the-list drill

Match the lists

Match List I with List II

Pick the numeral for each theory. Each numeral is used once.

No sets tried yet
List I · Theory
AIron law of wages
BDrift theory of consumption
CRural–urban migration model
DSecular stagnation
List II · Theorist
  1. IFerdinand Lassalle
  2. IIAlvin Hansen
  3. IIIJohn Harris and Michael Todaro
  4. IVArthur Smithies and James Tobin
05
Practice

Check yourself

0 of 8 correct so far

Match the lists

1Match: A. Life cycle hypothesis B. Drift theory C. Ratchet effect D. Permanent income hypothesis — with I. Friedman II. Modigliani III. Smithies and Tobin IV. Duesenberry
2Match: A. Cobweb theorem B. Over-investment theory C. Multiplier–accelerator cycle D. Psychological theory — with I. Schultz II. Pigou III. Hayek IV. Samuelson
3Match: A. Full cost pricing B. Limit pricing C. Marginal productivity theory D. Product exhaustion theorem — with I. Flux II. Clark and Wicksteed III. Hall and Hitch IV. Bain
4Who developed the theory of signalling in markets with asymmetric information?
5The doctrine of unbalanced growth was propounded by:
6The expression “iron law of wages” was coined by:
7Match: A. Restatement of the quantity theory B. Cash balance approach C. Inventory theoretic demand for money D. Portfolio optimisation — with I. Baumol II. Tobin III. Friedman IV. Marshall
8Which pair is wrongly matched?
Sources
  • Alfred Marshall, Principles of Economics (1890), Book I, ch. 1, for the definition quoted.
  • Peter J. Lloyd, 'The Discovery of the Isoquant', History of Political Economy 44 (2012).
  • Nicholas Kaldor, 'A Classificatory Note on the Determinateness of Equilibrium', Review of Economic Studies (1934); Mordecai Ezekiel, 'The Cobweb Theorem', QJE (1938).
  • Michael Spence, 'Job Market Signaling', QJE (1973); Stephen Ross, 'The Determination of Financial Structure: The Incentive-Signalling Approach', Bell Journal (1977).
  • Joseph Stiglitz and Andrew Weiss, 'Credit Rationing in Markets with Imperfect Information', AER (1981).
  • Past-paper answer keys: CUET-PG 2019–2026, UGC NET 2023–2026, JNU 2019, University of Hyderabad 2015 and 2018.
Try it on real questions

Twenty-two past-paper questions on who gave what

Match-the-list questions from UGC NET, CUET-PG, JNU and the University of Hyderabad, across consumption, money, cycles, pricing, public finance and development.

✦These are questions from the TestStop bank. A free account answers 10 a day, each with its worked solution; All-Access opens every set with no daily limit.

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