The purpose of this research to consider the Marshallian
contribution to the Keynesian argument. These contributions are
related primarily to the concept of expectations and to monetary
theory. Expectations, as they are perceived in economic theory,
are attitudes, beliefs, or states of mind about the nature
of future events. Expectations affect economic behavior and are
thus a part of the psychology of economic behavior. Expectations
pose difficulties for economists because they cannot be directly
observed. In economics, expectations may apply to virtually
anything--prices, interest rates, demand, profits, and so forth.
Expectations are held by investors, producers, and consumers.
Thus, they are capable of affecting most economic decisions.
Alfred Marshall was active in the development of economic
theory from the 1870s until well past his retirement, which
occurred in 1908. Marshall was in the long tradition of the
English classical school of economics, which was founded by Adam
Smith and David Ricardo, and his work provided the basis for
neoclassical economics. Among his greatest works was The
Principles of Economics, which was first published in 1890. His
theory of value, which incorporates the concept of utility, is
possibly his greatest contribution to economic theory.
Marshall considered expectations in the formulation of
economic theory. He did not, however, accord as prominent a role
to expectations as Keynes did in his development of economic
theory. John Maynard Keynes studied economics under Alfred
Marshall. Through work in government and academe, he was active
in the development of economic theory from the early-1900s until
his death in 1946. The best known of his economic works is The
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