We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Economics - Essay Example

Comments (0)
Summary
Principles of Economics Introduction The essay shows the various policies public and private institutions adopt to successfully exist in the industry. The essay covers a wide variety of macroeconomic and macroeconomic theories. In the first context, it analyses about the different approaches introduced in price and output determination in the economy by Keynesian and Monetarist school of economics…
Download full paper
GRAB THE BEST PAPER
Economics
Read TextPreview

Extract of sample
Economics

Download file to see previous pages... The policies undertaken by governments in different economies are highly influenced by his theories even today. The theories introduced by Keynes mainly concentrate in the nature of total spending in the economy. The theories also analyze the influence of aggregate demand in economies inflation and output level. According to Keynes the aggregate demand created in the economy is often not equal to the productive capacity of the economy. Keynesian theories were introduced during Great Depression in the economy. Keynesian theory supports a mixed economic system, where the main sectors of the economy are headed by private business entities but are guided under the rules and regulations of the government at times of recession (Keynes, 1979). New Classical Theories of Economics New Classical theories of economics are consisted with the economic views of the modern contemporary economists. The theories mainly concentrate in the price, output and determination of income distribution in the economic system. The conjectures focus on the free forces of market demand and supply in the economy. These theories explain the idea of rational economic behaviour. Maximization of consumer utility subject to budget constraints or maximization of producers profit subject to cost constrains are theories of neo classical economics. It assumes that economic entities in the world undertake their economic decisions after getting equipped with the underlying relevant information. Neo Classical theories of economics dominate the Keynesian views economics (Arnold, 2008). Aggregate Supply Curve The aggregate supply curve (AS) shows the different levels of Gross Domestic Product (GDP) in real terms, generated at changed levels of prices in a particular period of time. The curve shows the relation between price and real GDP, assuming all other factors affecting real GDP constant (Ceteris Paribus assumption). The Keynesian and Neo Classical views regarding the shape of the AS curve are contrasting. Keynesian AS curve Keynesian theory was introduced during the Great Depression when the economy was under strict recession. Due to recessionary trends in the market most of the resources were ideal and insensitive in the economy. Thus Keynesian theory firmly believed in the rigidity of price and wage rates in the economy. Keynesian theory is consistent with a horizontal AS curve where any changes in the real GDP are caused simply due to changes in the aggregate demand (AD) in the economy. It was analyzed by Keynes theory that only changes in the aggregate demand, could improve the state of a depressed economy. Figure 1 - Keynesian Horizontal AS curve CPI AD p AS q Real GDP (Source: Author’s Creation) The graph above illustrates the AD and AS curve in Keynes views. The consumer price index (CPI) is the average price level of all the goods and services produced in the economy. AD is inversely proportional to CPI as per the law of demand. The market equilibrium price (p) and equilibrium quantity (q) of real GDP generated in the economy are determined from the point of intersection between the AD and AS curves. Rise in Government Spending Impact In order to improve the aggregate income level in the economy the government undertakes expansionary fiscal policies. These policies ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Economics
For instance, Adam Smith’s theory of the invisible hand argues that when people engage in business and selling they are governed by the invisible hand of the market that helps regulate prices and ensures that businesses and people act in certain ways. Indeed, the nature of economics is like psychology in that it presents theories of human behavior.
3 Pages(750 words)Essay
Economics
As such, economic analysis relates to the study of economic systems in an industry to ascertain the effectiveness of the operations of a given industry with reference to its profitability1. With this, we are able to establish the optimum use of the limited resources to achieve a given economic objective.
6 Pages(1500 words)Essay
Economics
Thus, short-run is the time period that quantity of an input or at least one of the many inputs is fixed while other inputs’ quantities can vary. Long-run on the other hand is that time period where inputs in entirety can be varied. Therefore, there is no specific time that can be taken as fixed or even marked on the dates of the calendar to distinguish short-run from the long-run.
9 Pages(2250 words)Essay
ECONOMICS
If the quantity demanded of a certain product changes minimally or does not change at all, then that product is said to be a Price Inelastic Good. Consequently, if a product whose price increased and such a change brought forth an abrupt drop in quantity demanded of the same product, the good is said to be Price Elastic.
2 Pages(500 words)Essay
Economics
e that the people of a country would receive the best of every thing that could be education, housing, health services or the other various basic necessities. Economics has been called and is known as a Social Science one that actually focuses on the subject matter that is
2 Pages(500 words)Essay
Economics
But there are certain commodities, especially those meant for addiction purposes, whose prices have a very low impact on the decision making of the consumers, since people keep on
2 Pages(500 words)Essay
Economics
sought to apply a broader theoretical and conceptual tradition of economic thought by placing emphasis on neo-classical synthesis – a combination of neo-classical economics and Keynesian economics. Conservative economics is based on Milton Friedman’s teachings and
12 Pages(3000 words)Essay
Economics
s the above figure illustrates, if there is a supply shock in an economy (such as increase in the price of oil, labor or other costs that increase the cost of doing business), the short run AS curve shifts to the left. The real GDP decreases from Q to Q’ and the price level
2 Pages(500 words)Essay
Economics
Macroeconomics is the study of the conduct of the aggregate economy. Macroeconomics scrutinizes various economic issues including unemployment, economic growth,
4 Pages(1000 words)Essay
Economics
These tools enable professional mainstream economists to address various economic issues facing the world. Mainstream economics is about modeling in a way that traditional or heterodox economics is not. It originated from the neoclassical synthesis of the neoclassical
4 Pages(1000 words)Essay
Let us find you another Essay on topic Economics for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us