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Thatcher follows a policy of monetarism and this is the difference with the other administration. Thatcher strongly believed in an open and privatized economy. Therefore her government worked fiercely towards privatizing some of the major government organizations. This era advocated policies of free markets and nationalizations of banks and financial institutions. The soul of this era was the Big Bang of financial deregulation that prevailed in the market in the year 1986. The economy was left free to open trade by reduction of tariffs and trade duties. Thatcher government was in favor of market optimization by inviting competition. To fight with the inflation Thatcher, after coming to power increased the taxes and reduced government spending. It was reported that the first year of her tenure in the office, was marked by a reduction of 1 billion pounds in the government spendings. Policies were adopted to reduce the powers of the labor unions. Ordinary people were encouraged to own houses and the companies they work for. Large number of council houses was sold off to the tenants. Her government brought about reforms in government expenditure snd thus made the economy of Britain more effectual. This paper centers on the economic principles employed during the Thatcher era and justify the use of these different approaches under the current economic scenario of our country. (Pearce, n.d.)
Under this section we cover the major economic policies adopted during the Thatcher era. We further analyze the effectiveness of these policies in our country, especially in the current scenario when the economic conditions are almost the same as the one in United Kingdom before Margaret Thatcher took over as the president of United Kingdom. “When Mrs. Thatcher won the election in 1979, economic growth stood at just over 2% but this apparently respectable figure hid many problems. Unemployment had been rising from
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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.
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.
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.
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.
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
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
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
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
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