This document discusses three major schools of macroeconomic thought: Keynesian economics, monetarism, and new classical economics. Keynesian economics advocates for active government intervention, while monetarism and new classical economics are skeptical of intervention. Monetarism emphasizes that money matters and that inflation is purely a monetary phenomenon caused by increases in the money supply. New classical economics argues that traditional macro models assume expectations are formed naively. A debate continues between Keynesians, who support coordinated monetary and fiscal policy, and monetarists, who prefer a steady, non-interventionist approach to money growth.
Classical, Keynesian, monetarist, rational expectations, public choice, supply-side economics and libertarianism are the major schools of economic thought discussed. Classical economics viewed the economy as self-adjusting without government intervention, while Keynesian economics focused on government's role in achieving goals like growth. Excessive intervention led to problems, giving rise to monetarism focusing on controlling money supply and rational expectations theory criticizing policies. Public choice economics examined how resources are allocated politically, finding government failure. Supply-side economics emphasized tax cuts to boost growth and revenues. Libertarianism viewed government as coercive and interfering with freedom.
This document provides an overview of macroeconomics topics that will be covered in the Macroeconomics 2 course, including integrating classical and Keynesian schools of thought, the development of the New Neoclassical Synthesis, short and long run issues, and applications of macroeconomic models. It also summarizes the key differences between classical and Keynesian economics, including their views on unemployment, flexibility of wages and prices, and the appropriate role of government intervention in the economy.
1. Classical economics focused on laissez-faire policies and free markets while Keynesian economics emphasized government intervention.
2. Key figures in classical economics included Adam Smith and David Ricardo who believed that free markets would naturally lead to full employment without government intervention.
3. Keynesian economics emerged in response to the Great Depression and rejected classical ideas. Keynes argued that markets may not reach full employment on their own and that government could boost demand through spending and taxation policies.
New Keynesian economics evolved in response to new classical critiques of Keynesian macroeconomics. It incorporates Keynesian ideas like sticky prices and wages to explain short-run economic fluctuations. A key difference from new classical economics is the assumption that prices and wages adjust slowly rather than quickly clearing markets. This allows for involuntary unemployment and a role for monetary policy. A new synthesis has emerged merging tools from both new classical and new Keynesian models.
The classical theory of income and employmentAndrew Mwita
Classical economists believed that a free market would always achieve full employment through flexible wages and prices. According to Say's Law, increased production would create its own demand through higher incomes. However, Keynes criticized this view, arguing that reduced wages would lower aggregate demand by reducing incomes. The classical theory was valid for individual firms but failed to consider economy-wide effects of changes in income and demand.
Basic principles underlying both the Classical and the Keynesian schools of thought within Economics.
Work I produced whilst studying Monetary Economics in my second year of study at the University of Brighton.
Ryan Reardon Finance and Investment student.
Classical economics is a macroeconomic theory based on flexible prices, Say's law that supply creates its own demand, and equality between savings and investment. It traces back to Adam Smith and assumes markets clear naturally, leading to full employment. In contrast, Keynesian economics recognizes unemployment and a need for aggregate demand management by the government.
This document provides an overview of classical economics and compares it to modern/Keynesian economics. Some key points:
- Classical economics is based on flexible prices and wages, and the belief that savings will automatically equal investment through Say's Law. It sees the economy as self-regulating in the long run.
- Modern/Keynesian economics, developed by John Maynard Keynes, recognizes situations where savings and investment are not equal in the short run. It advocates for government intervention through spending and policies to stimulate demand and pull the economy out of slumps.
- Compared to classical economics which sees little role for government spending, Keynesian economics relies on government spending as a key part of
Classical, Keynesian, monetarist, rational expectations, public choice, supply-side economics and libertarianism are the major schools of economic thought discussed. Classical economics viewed the economy as self-adjusting without government intervention, while Keynesian economics focused on government's role in achieving goals like growth. Excessive intervention led to problems, giving rise to monetarism focusing on controlling money supply and rational expectations theory criticizing policies. Public choice economics examined how resources are allocated politically, finding government failure. Supply-side economics emphasized tax cuts to boost growth and revenues. Libertarianism viewed government as coercive and interfering with freedom.
This document provides an overview of macroeconomics topics that will be covered in the Macroeconomics 2 course, including integrating classical and Keynesian schools of thought, the development of the New Neoclassical Synthesis, short and long run issues, and applications of macroeconomic models. It also summarizes the key differences between classical and Keynesian economics, including their views on unemployment, flexibility of wages and prices, and the appropriate role of government intervention in the economy.
1. Classical economics focused on laissez-faire policies and free markets while Keynesian economics emphasized government intervention.
2. Key figures in classical economics included Adam Smith and David Ricardo who believed that free markets would naturally lead to full employment without government intervention.
3. Keynesian economics emerged in response to the Great Depression and rejected classical ideas. Keynes argued that markets may not reach full employment on their own and that government could boost demand through spending and taxation policies.
New Keynesian economics evolved in response to new classical critiques of Keynesian macroeconomics. It incorporates Keynesian ideas like sticky prices and wages to explain short-run economic fluctuations. A key difference from new classical economics is the assumption that prices and wages adjust slowly rather than quickly clearing markets. This allows for involuntary unemployment and a role for monetary policy. A new synthesis has emerged merging tools from both new classical and new Keynesian models.
The classical theory of income and employmentAndrew Mwita
Classical economists believed that a free market would always achieve full employment through flexible wages and prices. According to Say's Law, increased production would create its own demand through higher incomes. However, Keynes criticized this view, arguing that reduced wages would lower aggregate demand by reducing incomes. The classical theory was valid for individual firms but failed to consider economy-wide effects of changes in income and demand.
Basic principles underlying both the Classical and the Keynesian schools of thought within Economics.
Work I produced whilst studying Monetary Economics in my second year of study at the University of Brighton.
Ryan Reardon Finance and Investment student.
Classical economics is a macroeconomic theory based on flexible prices, Say's law that supply creates its own demand, and equality between savings and investment. It traces back to Adam Smith and assumes markets clear naturally, leading to full employment. In contrast, Keynesian economics recognizes unemployment and a need for aggregate demand management by the government.
This document provides an overview of classical economics and compares it to modern/Keynesian economics. Some key points:
- Classical economics is based on flexible prices and wages, and the belief that savings will automatically equal investment through Say's Law. It sees the economy as self-regulating in the long run.
- Modern/Keynesian economics, developed by John Maynard Keynes, recognizes situations where savings and investment are not equal in the short run. It advocates for government intervention through spending and policies to stimulate demand and pull the economy out of slumps.
- Compared to classical economics which sees little role for government spending, Keynesian economics relies on government spending as a key part of
This document summarizes and compares classical and Keynesian economics. Classical economics is centered around self-regulating markets that operate at full employment, while Keynesian economics recognizes markets do not always self-adjust and the economy can operate below full employment. Key differences include classical economics believing free markets are always stable versus Keynesian thinking they are unstable. The document also outlines Keynesian principles like markets clearing slowly and government intervention being desirable to stabilize the business cycle through fiscal and monetary policies.
- The document discusses classical macroeconomics, including its history and key concepts. It describes classical economists' views that markets naturally achieve full employment and that government intervention is unnecessary or harmful.
- Classical economists believed that flexible prices and wages, "Say's law" of markets, and savings-investment equality ensured stable output and employment. They saw unemployment as voluntary or temporary structural issues rather than economy-wide problems.
- The document outlines classical views on monetary and fiscal policy, aggregate supply and demand, and criticisms of their approach that emerged with the Great Depression when classical theories could not explain widespread unemployment.
This document provides an overview of post-Keynesian economics. It defines post-Keynesian economics, outlines some of its key characteristics such as its focus on effective demand and historical dynamics. It also describes some of the different strands within post-Keynesian theory, including Michal Kalecki's emphasis on imperfect competition and class division. Additionally, it summarizes theories around post-Keynesian income distribution in corporate economies developed by Robinson, Kaldor and Pasinetti, and post-Keynesian employment analysis based on the principle of effective demand determining labor-hire decisions.
- The document discusses the history and evolution of macroeconomic thought from Keynes' work in the 1930s establishing modern macroeconomics to recent developments.
- It describes the neoclassical synthesis of the 1950s which integrated Keynesian and classical ideas and the influential IS-LM model.
- In the 1970s, the rational expectations critique challenged Keynesian models and assumptions, leading to new classical, new Keynesian, and new growth theory work.
- By the late 1980s, these schools of thought had integrated rational expectations and nominal rigidities into models still used today like New Keynesian and DSGE models.
Classical economists believed that full employment was the normal state of the economy and any deviation from it was abnormal. They assumed a closed economy with homogeneous goods, laissez-faire policies, and a barter system. According to Say's law, supply creates its own demand so overproduction is not possible. The classical theory held that output and employment are determined by production functions and the demand and supply of labor, with diminishing marginal returns. Labor market equilibrium occurs at the wage rate where demand and supply of labor intersect.
It includes:
CLASSICAL THEORY OF EMPLOYMENT,
SAY’S LAW OF MARKET,
Determination of Employment and Output in the Classical Model,
Keynesian Theory of Employment,
Principle of Effective Demand, and on many more topics...
Classical economics believes that free markets are self-regulating and that government intervention harms the economy. In contrast, Keynesian economics emerged after the Great Depression to argue that markets are imperfect, unemployment and low growth can occur in equilibrium, and the government should intervene to stimulate demand when the economy is lacking growth. Keynes argued for government policies to boost consumer income and demand to promote economic growth, unlike classical economists who felt the economy would automatically adjust on its own.
NeoKeynesian models incorporate microeconomic foundations into macroeconomic models by assuming some price and wage rigidities exist. This includes assuming firms have market power, prices as well as wages are rigid in both nominal and real terms. Sticky price models suggest firms set prices that do not change daily due to menu costs. Efficiency wage models posit firms pay above market wages to reduce turnover and increase productivity. Insider-outsider models view insiders like union workers as having wage-setting power, creating involuntary unemployment for outsiders.
This document provides an overview of key concepts in macroeconomics, including:
1) Macroeconomics deals with the performance and decision-making of the entire economy, including factors like GDP, unemployment, and inflation.
2) The document outlines different macroeconomic schools of thought including Keynesian, neoclassical, monetarist traditions.
3) It also summarizes tools and models used in macroeconomics like fiscal/monetary policy, aggregate supply/demand, and circular flow analysis.
Milton Friedman was a prominent 20th century American economist known for his research on monetary policy and criticism of Keynesian economic theory. Some of his most influential ideas included:
1) His interpretation of the "quantity theory of money" which held that increases in the money supply beyond real economic growth would lead solely to price inflation, not increased output.
2) His advocacy for monetarism and the idea that central banks should target low and stable inflation through steady monetary growth.
3) His empirical research challenging ideas like the Phillips Curve and arguments that unemployment and inflation were inversely related.
Say's law, an idea in classical economics, rejects the possibility of general overproduction. It states that supply creates its own demand. The classical economists believed that savings are always invested, so aggregate supply equals aggregate demand, ensuring full employment. However, they acknowledged that monetary disturbances could cause temporary disequilibria by affecting money demand. Adjustment mechanisms, like interest rate changes, would bring the economy back to equilibrium at full employment over time. So Say's law expressed an equilibrium condition, not something always true.
classical economic theory Vs Keynisian Theory - an overviewShreya Sahay
The great depression of 1929 was a major event in world economy. the theories and practices before the depression are called the classical theory whereas, the theory that developed after the depression and explains the depression is called Keynesian theory.
This document provides an overview of two major theories of employment: the classical theory and Keynes' theory.
The classical theory states that employment is determined by the interaction of labor supply and demand in the market. It believes in full employment and that unemployment results from rigid wages or interference with free markets. Keynes' theory views employment from the demand side and says it depends on effective demand. Effective demand is driven by aggregate supply and demand. Unemployment can result from a deficiency in effective demand. The theories differ in their assumptions around flexibility of wages and prices and whether they examine things in the short or long run.
This document provides an overview of classical and Keynesian theories of income and employment. It discusses key differences between the two theories, including how they determine full employment. The classical theory believes full employment is the normal state, while Keynes argued unemployment can persist due to insufficient aggregate demand. The document then explains Keynesian concepts like aggregate demand, consumption, investment and their relationship to national income and output. It also outlines Keynes' model and equilibrium conditions between markets.
The classical theory of employment and output assumed full employment, perfect competition, and wage-price flexibility. It was based on Say's Law that supply creates its own demand and the quantity theory of money that money only impacts prices, not output. Under these assumptions, the economy would always attain general equilibrium with full employment determined by the intersection of labor demand and supply curves. However, the Great Depression showed the flaws in these assumptions and need for government intervention.
Meeting 8 - Keynesian model of unemployment (Macroeconomics)Albina Gaisina
The document discusses key concepts of the Keynesian model of unemployment including:
- Keynes rejected the idea of full employment and wage flexibility, instead arguing wages are rigid which can cause involuntary unemployment.
- Equilibrium in the labor market occurs at less than full employment when the demand for labor intersects the horizontal portion of the rigid wage supply curve.
- Keynes argued that government intervention through fiscal and monetary policies can help remedy unemployment by increasing aggregate demand.
- New Keynesian and neo-Keynesian models build on Keynes' ideas incorporating rational expectations and imperfect competition to explain why prices and wages adjust slowly.
Keynesian theory rejects Say's law that supply creates its own demand. It argues that the level of income and employment is determined by aggregate demand and supply in the short run, and that equilibrium could be below full employment. The key determinants of income are consumption, investment, and saving. The effective demand curve shows equilibrium between aggregate demand and supply. Keynes believed full employment could be achieved by increasing aggregate demand through policies like government spending.
The Future of Post Keynesian Economicspkconference
This document proposes that the best future for Post Keynesian economics is for Post Keynesian economists to teach the essential principles of true-Keynesian economics to students, professional economists, policymakers, the electorate, and the general public. It argues that true-Keynesian economics, based on Keynes' original work, differs significantly from the Keynesian neoclassical synthesis taught today. Teaching true-Keynesian economics under a new name, such as "true-Keynesian economics", would help distinguish it from the misrepresented version currently taught and better achieve the goals of reforming economics education and enhancing public understanding. The document outlines some key principles of true-Keynesian economics and argues
The document discusses different macroeconomic theories including:
- Classical economists believed in full employment and laissez-faire markets.
- Keynesians believe active government policy is needed to stabilize the economy due to unstable aggregate demand and downwardly inflexible prices and wages.
- Monetarists like Milton Friedman advocated for a monetary rule where the money supply increases 3-5% annually. They believe velocity is stable.
- New Keynesians see the economy as potentially unstable due to changes in investment and supply shocks. They support monetary policy targeting interest rates in the short-run and money supply in the long-run.
This document compares the Chicago School and Austrian School of economic thought. It discusses their differing views on monetary policy and business cycles. The Chicago School believes monetary policy can effectively target growth rates, while Austrians are skeptical of central bank discretion and blame booms and busts on unsustainable credit expansion. Both schools opposed irresponsible monetary expansion but differed on whether contractionary policies could worsen downturns. While the Chicago School has been more influential academically and politically, Austrians may offer a more accurate framework for understanding economic fluctuations.
This document summarizes and compares classical and Keynesian economics. Classical economics is centered around self-regulating markets that operate at full employment, while Keynesian economics recognizes markets do not always self-adjust and the economy can operate below full employment. Key differences include classical economics believing free markets are always stable versus Keynesian thinking they are unstable. The document also outlines Keynesian principles like markets clearing slowly and government intervention being desirable to stabilize the business cycle through fiscal and monetary policies.
- The document discusses classical macroeconomics, including its history and key concepts. It describes classical economists' views that markets naturally achieve full employment and that government intervention is unnecessary or harmful.
- Classical economists believed that flexible prices and wages, "Say's law" of markets, and savings-investment equality ensured stable output and employment. They saw unemployment as voluntary or temporary structural issues rather than economy-wide problems.
- The document outlines classical views on monetary and fiscal policy, aggregate supply and demand, and criticisms of their approach that emerged with the Great Depression when classical theories could not explain widespread unemployment.
This document provides an overview of post-Keynesian economics. It defines post-Keynesian economics, outlines some of its key characteristics such as its focus on effective demand and historical dynamics. It also describes some of the different strands within post-Keynesian theory, including Michal Kalecki's emphasis on imperfect competition and class division. Additionally, it summarizes theories around post-Keynesian income distribution in corporate economies developed by Robinson, Kaldor and Pasinetti, and post-Keynesian employment analysis based on the principle of effective demand determining labor-hire decisions.
- The document discusses the history and evolution of macroeconomic thought from Keynes' work in the 1930s establishing modern macroeconomics to recent developments.
- It describes the neoclassical synthesis of the 1950s which integrated Keynesian and classical ideas and the influential IS-LM model.
- In the 1970s, the rational expectations critique challenged Keynesian models and assumptions, leading to new classical, new Keynesian, and new growth theory work.
- By the late 1980s, these schools of thought had integrated rational expectations and nominal rigidities into models still used today like New Keynesian and DSGE models.
Classical economists believed that full employment was the normal state of the economy and any deviation from it was abnormal. They assumed a closed economy with homogeneous goods, laissez-faire policies, and a barter system. According to Say's law, supply creates its own demand so overproduction is not possible. The classical theory held that output and employment are determined by production functions and the demand and supply of labor, with diminishing marginal returns. Labor market equilibrium occurs at the wage rate where demand and supply of labor intersect.
It includes:
CLASSICAL THEORY OF EMPLOYMENT,
SAY’S LAW OF MARKET,
Determination of Employment and Output in the Classical Model,
Keynesian Theory of Employment,
Principle of Effective Demand, and on many more topics...
Classical economics believes that free markets are self-regulating and that government intervention harms the economy. In contrast, Keynesian economics emerged after the Great Depression to argue that markets are imperfect, unemployment and low growth can occur in equilibrium, and the government should intervene to stimulate demand when the economy is lacking growth. Keynes argued for government policies to boost consumer income and demand to promote economic growth, unlike classical economists who felt the economy would automatically adjust on its own.
NeoKeynesian models incorporate microeconomic foundations into macroeconomic models by assuming some price and wage rigidities exist. This includes assuming firms have market power, prices as well as wages are rigid in both nominal and real terms. Sticky price models suggest firms set prices that do not change daily due to menu costs. Efficiency wage models posit firms pay above market wages to reduce turnover and increase productivity. Insider-outsider models view insiders like union workers as having wage-setting power, creating involuntary unemployment for outsiders.
This document provides an overview of key concepts in macroeconomics, including:
1) Macroeconomics deals with the performance and decision-making of the entire economy, including factors like GDP, unemployment, and inflation.
2) The document outlines different macroeconomic schools of thought including Keynesian, neoclassical, monetarist traditions.
3) It also summarizes tools and models used in macroeconomics like fiscal/monetary policy, aggregate supply/demand, and circular flow analysis.
Milton Friedman was a prominent 20th century American economist known for his research on monetary policy and criticism of Keynesian economic theory. Some of his most influential ideas included:
1) His interpretation of the "quantity theory of money" which held that increases in the money supply beyond real economic growth would lead solely to price inflation, not increased output.
2) His advocacy for monetarism and the idea that central banks should target low and stable inflation through steady monetary growth.
3) His empirical research challenging ideas like the Phillips Curve and arguments that unemployment and inflation were inversely related.
Say's law, an idea in classical economics, rejects the possibility of general overproduction. It states that supply creates its own demand. The classical economists believed that savings are always invested, so aggregate supply equals aggregate demand, ensuring full employment. However, they acknowledged that monetary disturbances could cause temporary disequilibria by affecting money demand. Adjustment mechanisms, like interest rate changes, would bring the economy back to equilibrium at full employment over time. So Say's law expressed an equilibrium condition, not something always true.
classical economic theory Vs Keynisian Theory - an overviewShreya Sahay
The great depression of 1929 was a major event in world economy. the theories and practices before the depression are called the classical theory whereas, the theory that developed after the depression and explains the depression is called Keynesian theory.
This document provides an overview of two major theories of employment: the classical theory and Keynes' theory.
The classical theory states that employment is determined by the interaction of labor supply and demand in the market. It believes in full employment and that unemployment results from rigid wages or interference with free markets. Keynes' theory views employment from the demand side and says it depends on effective demand. Effective demand is driven by aggregate supply and demand. Unemployment can result from a deficiency in effective demand. The theories differ in their assumptions around flexibility of wages and prices and whether they examine things in the short or long run.
This document provides an overview of classical and Keynesian theories of income and employment. It discusses key differences between the two theories, including how they determine full employment. The classical theory believes full employment is the normal state, while Keynes argued unemployment can persist due to insufficient aggregate demand. The document then explains Keynesian concepts like aggregate demand, consumption, investment and their relationship to national income and output. It also outlines Keynes' model and equilibrium conditions between markets.
The classical theory of employment and output assumed full employment, perfect competition, and wage-price flexibility. It was based on Say's Law that supply creates its own demand and the quantity theory of money that money only impacts prices, not output. Under these assumptions, the economy would always attain general equilibrium with full employment determined by the intersection of labor demand and supply curves. However, the Great Depression showed the flaws in these assumptions and need for government intervention.
Meeting 8 - Keynesian model of unemployment (Macroeconomics)Albina Gaisina
The document discusses key concepts of the Keynesian model of unemployment including:
- Keynes rejected the idea of full employment and wage flexibility, instead arguing wages are rigid which can cause involuntary unemployment.
- Equilibrium in the labor market occurs at less than full employment when the demand for labor intersects the horizontal portion of the rigid wage supply curve.
- Keynes argued that government intervention through fiscal and monetary policies can help remedy unemployment by increasing aggregate demand.
- New Keynesian and neo-Keynesian models build on Keynes' ideas incorporating rational expectations and imperfect competition to explain why prices and wages adjust slowly.
Keynesian theory rejects Say's law that supply creates its own demand. It argues that the level of income and employment is determined by aggregate demand and supply in the short run, and that equilibrium could be below full employment. The key determinants of income are consumption, investment, and saving. The effective demand curve shows equilibrium between aggregate demand and supply. Keynes believed full employment could be achieved by increasing aggregate demand through policies like government spending.
The Future of Post Keynesian Economicspkconference
This document proposes that the best future for Post Keynesian economics is for Post Keynesian economists to teach the essential principles of true-Keynesian economics to students, professional economists, policymakers, the electorate, and the general public. It argues that true-Keynesian economics, based on Keynes' original work, differs significantly from the Keynesian neoclassical synthesis taught today. Teaching true-Keynesian economics under a new name, such as "true-Keynesian economics", would help distinguish it from the misrepresented version currently taught and better achieve the goals of reforming economics education and enhancing public understanding. The document outlines some key principles of true-Keynesian economics and argues
The document discusses different macroeconomic theories including:
- Classical economists believed in full employment and laissez-faire markets.
- Keynesians believe active government policy is needed to stabilize the economy due to unstable aggregate demand and downwardly inflexible prices and wages.
- Monetarists like Milton Friedman advocated for a monetary rule where the money supply increases 3-5% annually. They believe velocity is stable.
- New Keynesians see the economy as potentially unstable due to changes in investment and supply shocks. They support monetary policy targeting interest rates in the short-run and money supply in the long-run.
This document compares the Chicago School and Austrian School of economic thought. It discusses their differing views on monetary policy and business cycles. The Chicago School believes monetary policy can effectively target growth rates, while Austrians are skeptical of central bank discretion and blame booms and busts on unsustainable credit expansion. Both schools opposed irresponsible monetary expansion but differed on whether contractionary policies could worsen downturns. While the Chicago School has been more influential academically and politically, Austrians may offer a more accurate framework for understanding economic fluctuations.
Monetarism is an economic school of thought that stresses the primary importance of the money supply in determining nominal GDP and price levels. It challenges Keynesian economics by arguing that monetary policy, not fiscal policy, should be used to stabilize the economy. Monetarists believe the central bank should target money supply growth and follow fixed rules, rather than have discretion, as monetary factors are more important than fiscal interventions in impacting economic outcomes.
The document provides an overview of monetarism and Milton Friedman's restatement of the quantity theory of money. It discusses four key aspects of monetarism: (1) that fluctuations in the money supply are the dominant cause of fluctuations in real output; (2) monetarism's use of an expectations-augmented Phillips curve; (3) a monetary approach to exchange rates; and (4) support for monetary policy rules over discretionary policies. It also summarizes Friedman's restatement of the quantity theory and three arguments for adopting a rule-based monetary policy of steady money supply growth.
This document outlines the key policies and positions of Thatcherism and modern British conservatism, including support for free markets, small government, privatization, opposition to unions, tax cuts, anti-immigration stances, traditional social values, and skepticism of the welfare state. It also discusses specific policies like privatizing national industries, limiting the power of unions, reducing spending on public services like healthcare, and taking a tough approach to criminal justice.
This document contains information about a presentation including:
1) A list of 5 group members and their identification numbers
2) Economic data for the UK in 2005 including GDP components like consumption, investment, exports and imports.
3) Calculation of UK GDP in 2005 using expenditure approach which equals £1223 billion.
4) Data on production quantities and prices of bananas and coconuts in the Tropical Republic for 2005 and 2006, and calculation of nominal and real GDP for those years.
5) Explanations of economic effects for three events: a recession, rising oil prices, and falling expected business profits, using AD/AS analysis.
6) A table and graphs showing Japan's
The document discusses various methods for calculating GDP, including the income, expenditure, and output approaches. It notes that all approaches should yield the same result according to the circular flow model. It also discusses related concepts like GNP, national income, personal income, disposable income, real GDP, GDP deflator, and purchasing power parity which are used to adjust GDP comparisons.
The document discusses key concepts in national income accounting including:
- Gross National Product (GNP) measures the value of all final goods and services produced within a nation in a given year. It has limitations as it excludes informal economic activities.
- The expenditure approach and income approach are two methods to calculate GNP based on expenditures and factor incomes.
- Other important concepts include Net National Product (NNP), National Income (NI), Personal Income (PI), Disposable Income (DI), and their relationships to consumption.
The document defines GDP (gross domestic product) and provides three equivalent definitions:
1) Total expenditures on final goods and services produced domestically in a year
2) Sum of the value added at each stage of production by all domestic industries plus taxes and subsidies
3) Sum of all domestic income including employee compensation, business profits, taxes, and subsidies.
The document summarizes the key components of Gross Domestic Product (GDP):
1) Consumption (C) which includes durable goods, non-durable goods, and services. Durable goods have a longer lifespan while non-durable goods have a shorter lifespan. Services are the fastest growing component.
2) Investment (I) which refers to business investment in capital.
3) Government spending (G) which is the sum spent on final goods and services by the government including salaries and weapons.
4) Net exports (X-M) which is gross exports minus imports of goods and services.
The document compares the monetary and Keynesian approaches to economic stability. The monetary (or monetarist) approach is based on the role of money in stabilizing aggregate demand, and believes that limiting government intervention and controlling the money supply are key. The Keynesian approach focuses on the role of government spending in stabilizing aggregate demand, and does not restrict government intervention. It believes fiscal policy tools like tax rates and government spending are most important for achieving economic stability, especially during downturns when suggested solutions include increasing various types of spending.
Gross Domestic Product, or GDP, is a measurement of the total market value of all final goods and services produced within a country in a given period of time, usually a year. GDP is used to indicate the overall economic performance and health of a nation's economy. It excludes production that occurs abroad and only includes "new" domestic production, not used goods. GDP has limitations as it does not account for non-market activities, distribution of goods, leisure time, or negative externalities like pollution.
Gross Domestic Product [What is not included]knorman31
The document discusses what is and is not included in GDP calculations. It provides examples of various economic transactions and whether they would be counted as part of GDP or not. The key things not counted in GDP are: second-hand sales, transfer payments, purely financial transactions, intermediate goods, production by US corporations overseas, non-market transactions, illegal business activity, and unreported legal business activity.
This document provides an introduction to macroeconomics. It discusses how macroeconomics examines the overall economy and economic aggregates, in contrast to microeconomics which focuses on individual decision-making units. It also covers the development of macroeconomics in response to the Great Depression, key macroeconomic concerns like inflation and unemployment, and the three main policy approaches used by governments to influence the macroeconomy.
This document discusses debates in macroeconomics between different schools of thought, including:
- Monetarism, which believes money matters and that inflation is purely a monetary phenomenon caused by increases in the money supply. It argues against activist policies.
- New classical macroeconomics, which challenges Keynesian assumptions about expectations. It incorporates rational expectations theory and real business cycle theory.
- Supply-side economics, which argues that incentives affect supply and output, not just demand. It advocates lower taxes and less regulation.
The document outlines these theories and debates surrounding them. It also evaluates rational expectations theory and different macroeconomic models.
This document discusses macroeconomics and macroeconomic policy debates from classical and Keynesian perspectives. It covers unemployment, price stability, and exchange rates. On unemployment, classical economists believe full employment is always achieved through flexible wages, while Keynesians believe unemployment is normal and government intervention is needed. On price stability, classical economists see prices adjusting to maintain full employment while Keynesians see stable prices with variable output. Exchange rates are influenced by demand and supply factors in both frameworks.
This document provides an overview of the principle of effective demand, which the author argues is the key to understanding Keynes' General Theory. It discusses how Keynes presented a theory of long-run equilibrium where full employment is not guaranteed, in contrast to the views of many Keynesians. It also clarifies that wage rigidity is not the primary cause of unemployment for Keynes. Finally, it outlines how the principle of effective demand replaces Say's Law by demonstrating that in a monetary economy, producers face a limit to profitable expansion before full employment due to the relationship between the rate of interest and marginal efficiency of capital.
This document provides an overview of managerial economics and financial accounting concepts. It defines managerial economics as applying economic methods to managerial decision making to maximize profits. Key concepts discussed include static vs dynamic economics, economic problems related to scarcity and choice, and measures of national income like GDP, GNP, NNP, and personal income. Circular flow of the economy is also explained showing the flows of money between households, firms, and government.
Meaning, definition, nature, scope, importance and limitation of macro econo...Ashutosh Deshmukh
The document provides an overview of macroeconomics concepts taught by Dr. Ashutosh A. Deshmukh. It defines macroeconomics as the study of aggregates and averages covering the economy as a whole, such as total income, employment, output, prices. It discusses key events that influenced the development of macroeconomics like the Great Depression. It also outlines several macroeconomic topics, theories and models covered, including classical employment theory, Keynesian economics, economic growth, and limitations of the macroeconomic approach.
This document provides an overview of the history and evolution of macroeconomic thought. It discusses classical macroeconomics, the Keynesian revolution in response to the Great Depression, and subsequent challenges to and developments in Keynesian theory including monetarism, rational expectations, and real business cycle theory. Modern macroeconomics incorporates elements of different schools of thought with an emphasis on the role of both aggregate demand and supply factors.
This document provides an introduction to macroeconomics. It defines macroeconomics as the study of factors that determine aggregate production, employment, prices and their changes over time in an economy. Key aspects covered include the classical and Keynesian views of macroeconomics, macroeconomic variables, models and approaches used in analysis. Important macroeconomic issues discussed are achieving economic growth, preventing business cycles, controlling inflation, unemployment, budget deficits, and managing international economic issues.
This document reviews the literature on the relationship between monetary policy and economic growth. It begins with an overview of the evolution of theories from classical quantity theory to modern New Keynesian and New Consensus models. While theories differ in their assumptions around price flexibility and market clearing, most support some short-run effect of monetary policy on output. Empirically, studies find mixed results, with some supporting and others finding no relationship, depending on factors like country development and institutional quality. Overall, the literature suggests monetary policy can impact growth in developed markets with independent central banks, while the relationship is weaker in developing economies.
We
want
to
present
here
the
MacroEconomics
of
a
fascinaFng
Delta
region.
The
only
point
is
that
this
Delta
is
not
the
Delta
of
the
Mississippi
nor
the
Nile
Delta
but
the
Delta
of
the
Nvrin.
The
Nvrin
exists
as
a
trend,
a
mental
breaker.
Its
existence
in
mathemaFcal
terms
must
be
seen
as
an
inducFve
limit
of
all
posiFve
forces
in
the
current
world
economy,
as
the
crystallisaFon
of
a
perfect
economic
system.
The
Americas
of
the
Great
Expansion
defended
the
pursuit
of
Wealth
as
a
value
in
itself.
A
spiritual
value.
The
Originality
of
the
Nvrin
is
to
be
even
more
vocal
and
precise:
Spending
money
is
a
value
in
itself,
the
ulFmate
spiritual
value.
So,
please,
discover
in
the
following
slides
the
breath
of
a
different
civilisaFon.
With
different
values,
different
social
and
societal
norms.
The
Delta
of
the
Nvrin
region.
A
region
that
will
convince
you
the
Ancient
Greece
is
sFll
somewhere
out there.
This document provides an overview of macroeconomic theories from pre-Keynesian to modern times. It discusses classical and neoclassical economics, Marxian economics, the Great Depression, Keynes' theories, the neoclassical synthesis, monetarism, new classical economics, real business cycle theory, and new Keynesian economics. Key figures and their contributions to each school of thought are outlined in detail.
This chapter discusses two modern theories of business cycles:
1) Real Business Cycle theory assumes flexible prices and that fluctuations result from optimal responses to productivity shocks.
2) New Keynesian theory explains why prices and wages are sticky in the short-run, causing recessions as coordination failures when firms do not lower prices together. It incorporates insights from both schools to better understand economic fluctuations.
Static, Dynamic and Comparative Static EconomicsBikash Kumar
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Rabbi
Mehedi
Sadia
Rafia
Tuhin
John Maynard Keynes was a highly influential 20th century British economist. He developed modern macroeconomics and established the school of thought known as Keynesian economics. During the Great Depression, Keynes challenged classical economic theories and advocated for fiscal and monetary policies to mitigate recessions. Some of Keynes' major contributions included establishing macroeconomics as a field, developing Keynesian economics which focuses on using government policy to manage aggregate demand, introducing concepts like liquidity preference and the fiscal multiplier, and establishing the AD-AS macroeconomic model which is used to analyze the business cycle.
1) John Maynard Keynes developed the Keynesian school of economics in response to the Great Depression. His major work, The General Theory of Employment, Interest and Money, argued that government intervention was needed to increase aggregate demand and pull the economy out of recession.
2) Keynes argued that Say's Law did not always hold, and that unemployment could persist if aggregate demand was insufficient. He advocated for fiscal policy tools like government spending and tax cuts to boost effective demand.
3) The Keynesian school emphasized macroeconomics, instability in the economy, and advocated for active fiscal and monetary policies by the government to promote full employment and economic growth.
Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate, economy. The two main areas of macroeconomic research are long-term economic growth and shorter-term business cycles.
Keynes introduced new ideas in economics that challenged the neoclassical view of how markets work. His key ideas included that flexible wages and prices may not lead to full employment, and that a lack of investment or a liquidity trap could prevent full employment from being reached. This sparked debate between Keynesians and neoclassical economists. Keynesians argued flexible wages may not clear labor markets, while neoclassicals said deflation would increase real money balances and shift the IS curve, ensuring full employment. Keynes' ideas influenced macroeconomic policies in subsequent decades.
Macroeconomics is the study of the economy as a whole, examining aggregates such as national income, output, employment and price levels. It analyzes how these aggregates interact and how policies affect their behavior. Macroeconomics emerged as a separate field due to the failure of classical economics to explain the Great Depression. John Maynard Keynes developed theories emphasizing aggregate demand and the role of government in managing the economy. Later schools include monetarism, supply-side economics and new classical macroeconomics, debating the factors driving output and inflation.
Similar to economics schools of thoughts and history of economics thoughts,, different economics schools (20)
The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
Madhya Pradesh, the "Heart of India," boasts a rich tapestry of culture and heritage, from ancient dynasties to modern developments. Explore its land records, historical landmarks, and vibrant traditions. From agricultural expanses to urban growth, Madhya Pradesh offers a unique blend of the ancient and modern.
How to Identify the Best Crypto to Buy Now in 2024.pdfKezex (KZX)
To identify the best crypto to buy in 2024, analyze market trends, assess the project's fundamentals, review the development team and community, monitor adoption rates, and evaluate risk tolerance. Stay updated with news, regulatory changes, and expert opinions to make informed decisions.
KYC Compliance: A Cornerstone of Global Crypto Regulatory FrameworksAny kyc Account
This presentation explores the pivotal role of KYC compliance in shaping and enforcing global regulations within the dynamic landscape of cryptocurrencies. Dive into the intricate connection between KYC practices and the evolving legal frameworks governing the crypto industry.
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
https://36crypto.com/the-future-of-dogecoin-how-high-can-this-cryptocurrency-reach/
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
How to Invest in Cryptocurrency for Beginners: A Complete GuideDaniel
Cryptocurrency is digital money that operates independently of a central authority, utilizing cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies are decentralized and typically operate on a technology called blockchain. Each cryptocurrency transaction is recorded on a public ledger, ensuring transparency and security.
Cryptocurrencies can be used for various purposes, including online purchases, investment opportunities, and as a means of transferring value globally without the need for intermediaries like banks.
Discovering Delhi - India's Cultural Capital.pptxcosmo-soil
Delhi, the heartbeat of India, offers a rich blend of history, culture, and modernity. From iconic landmarks like the Red Fort to bustling commercial hubs and vibrant culinary scenes, Delhi's real estate landscape is dynamic and diverse. Discover the essence of India's capital, where tradition meets innovation.