BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Posted on September 16, 2026 by Dr. David Edward Marcinko MBA MEd CMP™
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WASHINGTON (AP) — The Federal Reserve just raised its benchmark interest rate Wednesday for the first time since 2023 in an effort to quell stubbornly-high inflation, a move that could spur a sharp response from the White House.
The quarter-point increase lifts the Fed’s key rate to about 3.9% and, over time, could result in higher borrowing costs for mortgages, auto loans, and credit cards. In a set of quarterly projections, the Fed also signaled that its rate-setting committee expects to hike rates a second time later this year to 4.1%.
“Today’s policy action will support a timelier return” to the central bank’s 2% inflation goal, the Fed said in a statement.
Economic theories are structured frameworks—such as classical, Keynesian, supply and demand, and neoclassical—that explains how economies function, how resources are allocated, and how markets behave.
What is Economic Theory
Economic theory provides concepts, principles, and models to analyze how societies produce, distribute, and consume goods and services. It helps explain phenomena like price changes, market behavior, and economic growth, and guides policymakers in addressing issues such as inflation and unemployment.
Major Branches
Microeconomic Theory: Focuses on individuals, firms, markets, and decision-making.
Macroeconomic Theory: Examines aggregate indicators such as national income, fiscal policy, inflation, and unemployment.
Key Economic Theories
1. Classical Economic Theory
Key Thinkers: Adam Smith, David Ricardo, and Thomas Malthus.
Core Idea: Markets self-regulate through the “invisible hand,” promoting efficient resource allocation with minimal government intervention.
2. Keynesian Economic Theory
Key Thinker: John Maynard Keynes.
Core Idea: Demand drives economic activity; government intervention is necessary during recessions to stabilize the economy.
3. Supply and Demand Theory
Explains price determination through equilibrium where quantity demanded equals quantity supplied.
4. Neoclassical Economics
Focuses on rational choice, utility maximization, and market equilibrium.
5. Marxian Economics
Analyzes capitalism through class struggle, labor value, and exploitation.
6. Monetarism
Emphasizes the role of monetary policy and control of the money supply in managing economic stability.
7. New Classical & New Keynesian Economics
New Classical: Advocates rational expectations and market-clearing models.
New Keynesian: Incorporates price stickiness and supports policy intervention.
Schools of Economic Thought
Economic theories are often grouped into schools such as classical, Marxian, neoclassical, Keynesian, and heterodox approaches. Modern mainstream economics includes micro and macro branches, with distinctions like saltwater vs. freshwater economists in the U.S.
Economic theories continue to evolve, shaping how economists interpret markets, forecast trends, and design policy solutions.
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