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All such factors are considering by policy makers while implementing macroeconomic policies for the country. The savings investment behavior of the economy can be captured through neoclassical economics including the golden rule of accumulation. The golden rule is adopted to move towards optimum consumption. The golden rule determines the desired level of savings since under this level all profits are saved and then reinvested (Baumgartner and Meredith, 1995, p.6). Thus the current paper tends to discuss the golden rule of accumulation and its implications for macroeconomic policies.
The production function of a country depicts how the country utilizes the available resources and inputs for producing output. Land, labor, capital and organization are termed as factors of production. We mainly use capital (K) and labor (L) as the two factors. It is given as,
Equally important as production is the concept of consumption which is the difference between income and savings. The consumption function depicts the relation between consumption and disposable income (Consumption Function). It is given as,
Attainment of steady state means that an economy has gained stability. A country has attained steady state either due to increase or decrease in growth. It occurs when production rates or the country’s investment equals depreciation. Such a phenomenon is shown in the diagram below: B B depreciation (δk)
Here it is seen that under the steady state output labor ratio becomes stagnant as investment becomes equal to depreciation at point A. production function determines the output- labor ratio at point B. Away from A the economy is converging towards steady state.
Under the steady state the government requires to choose that level of
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“Explain and Discuss the Golden Rule of Accumulation and Assess the Essay”, n.d. https://studentshare.org/macro-microeconomics/1587194-explain-and-discuss-the-golden-rule-of-accumulation-and-assess-the-implications-for-macroeconomic-policy.
Without motivation, no productivity is possible. It is therefore, extremely important for the managers to ensure that the work environment has all the capacity to keep the workers motivated for work. A lot of projects conventionally suffer because of lack of productivity of workers, and motivation is more often than not, the key reason behind that.
GDP is often considered the best measure of how well the economy is performing (Mankiw 1997, p.17). It measures the flow of money in an economy as it attempts to summarize in a single number the money value of the economic activities performed by the households like their earnings and their consumptions and by firms like their earnings and the prices they are charging.
This is the neo-classical model of economic growth. In 1946, Robert Solow and T. W. Swan independently developed this exogenous growth model. This steady state rate of growth is consistent with the economy’s natural rate of output. Policymakers use this model to understand why different countries grow at different rates and this is the main relevance of this model.
377). The General Law brings together several years of Marx’s political ideologies. Marx’s political ideas were often expressed in several texts and in different ways that were not always easy to follow (Jessop & Wheatley, p. xivii). As Gurley (1980) explains, it is not possible to fully understand Marx’s The General Law without first understanding Marx’s political ideas that preceded Capital which includes The General Law.
Although the term itself has been in existence for far longer than the Communist understanding of the way in which global economics takes place, it was Marx who most clearly elucidated and defined this concept. Although many of Karl Marx theories and understandings were inexorably linked to a rather slanted and biased view against capitalism as a means of defining global economics, Marx understanding of “capital accumulation” can almost invariably be accepted as a perfect textbook definition.
The rule's all encompassing simplicity has attracted countless trivializing counter-examples: Should followers of fried beetles serve them as a special exotic delicacy to their guests Or masochists impose their desired torments on unsuspecting friends Such inquiries, though, miss the sense of the rule.
For example there are different types of cotton; jute, hides and skins are supplies to the producers of cotton textiles, gunny bags and shoes respectively. At the same time manufactured goods, which have been produced with the raw materials, are supplied to the consumers.
For the past few years, several controversies are spreading regarding whether monetary policies should either be considered as rules or as discretion. The many economists debate between rule and discretionary monetary policies has given different
Throughout the known world, some form of the Golden Rule was a part of the general religious code for a great many of the people. The idea that the Golden Rule is a recognized factor in most of the world’s religions was stated by the 1993 Parliament of the World’s religions in a signed statement called Towards a Global Ethic: Initial Declaration.