fined the conditions of a stable economic system and the methods by which the economy will return itself to equilibrium following a disturbance. An example would be when an increase in demand will bring about a rise in the prices.Samuelson’s consumption theory defined consumer preferences on the basis of observable behavior. Previous theory looked at the effects of consumption based on incomes and prices. Samuelson believed that households would reveal their preferences by observing their purchasing behavior. This theory provided an important tool of observable behavior for economist to analyze consumption theory.The equilibrium theory developed by Samuelson studied the interaction between all prices and quantities in an economic system. Under this theory Samuelson demonstrated that free trade is superior to protection by tariffs. Even though it is a known fact that foreign trade causes redistribution within countries, it is more beneficial for individuals benefiting from free trade to completely compensate those who lose in international trade. This method is more beneficial to all involved than the use of tariffs which raise the price of the product and reduce the rewards for international trade.Traditional thinking regarding capital theory was that there must be an application of an aggregate stock of capital to determine the capital goods of a society. Samuelson, working with Robert Solow, developed a logical capital theory. This theory is based on the assumption that all capital goods in a society can be equated to a sum of money. (http://www.nobel.se/laureates/economy-1970-press.htlm)INFLUENCESThe influence of Paul Samuelson can be pinpointed to one man. In his economics textbook, Economics: An Introductory Analysis, he teaches his economic philosophy based on the theories of economist John Maynard Keynes. Samuelson’s textbook is said to be the most influential presentation of the Neoclassical/Keynesian syn...
