Though Samuelson made major contributions to many
branches of economics, three are particularly notable. First, he
showed how the central predictions of demand theory could be
tested using the “revealed preferences” of consumers from
observed market behaviour. Second, in international trade
theory, he made important contributions in the analysis of the
gains from trade and the effects of tariff protection on the
distribution of income. Third, most familiar to readers of this
book, he is credited with introducing the 45°-line model of
short-run national income determination. This diagram,
encountered throughout Chapters 21 and 22 of this book, has
become the standard tool for teaching the Keynesian theory of
national-income determination in the short run. Samuelson’s
work also provided valuable insights in other areas of
economics, including government taxation and expenditure,
capital theory, and theories of economic growth.
Samuelson was also well known for his famous introductory
economics textbook, Economics, first published in 1948, which
provided a systematic treatment of both micro- and
macroeconomics in a way that had not been presented before.
In general, he is credited with raising the level of scientific and
mathematical analysis in economics. Samuelson was awarded
the Nobel Prize in Economics in 1970, and was the first
American scholar to receive this honour.