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Title: The Promotion of the Macro Economic Growth - Economic Schools
Description: Explanation about the Economic schools Class for Macro Economics
Description: Explanation about the Economic schools Class for Macro Economics
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Paper by Cezanne Kooter
UGCCFE102 Macro Economics
Professor Jonas Ljunggren
27th of January, 2016
The promotion of the macroeconomic growth
The two different schools of thought
...
There are however two schools of thought that are specifically used to promote
macroeconomic growth, the Keynesian (demand-side) and Classical (supply
side) School of thought
The root of the Classical school and how it works
The classical school is regarded as the first school of economic thought
...
The main idea of
the Classical school was that markets work best when they are left alone, and
that there is nothing but the smallest role for government
...
The approach is firmly one of laissez-faire and a strong belief in the
efficiency of free markets to generate economic development
...
In a free-enterprise system,
individuals make a profit by producing goods that other people are willing to buy
...
The two different schools of thought
...
Later on, British economist
Ricardo expanded upon both ideas
...
Ricardo fully
recognized, however, that over short periods price depends on supply and
demand
...
Taking the limited growth potential of any national economy as a given, Ricardo
concluded that a particular social class could gain a larger share of the product
only at the expense of another
...
2
Paper by Cezanne Kooter
UGCCFE102 Macro Economics
Professor Jonas Ljunggren
27th of January, 2016
The promotion of the macroeconomic growth
The two different schools of thought
...
As there is no unemployment, growth depends upon the
supply of production factors
...
The root of the Keynesian school and how it works
Keynesian economics was largely founded on the basis of the works of John
Maynard Keynes
...
It is
essentially a theory of aggregate demand, and how best to manipulate it through
macro-economic policy
...
In order to stimulate
demand and pull the global economy out of the depression, Keynes encouraged
increasing government expenditures and lower taxes
...
Keynesian economists believe
that the business cycle can be managed by active government intervention
through fiscal policy, i
...
spending more in recessions to stimulate demand, and
monetary policy, i
...
stimulating demand with lower rates
...
Subsequently, the term “Keynesian economics” was used to refer to the
concept that optimal economic performance could be achieved - and economic
4
Paper by Cezanne Kooter
UGCCFE102 Macro Economics
Professor Jonas Ljunggren
27th of January, 2016
The promotion of the macroeconomic growth
The two different schools of thought
...
The Keynesian approach is interventionist, coming from a belief that the
self-interest, which governs micro-economic behavior, does not always lead to
long run macro-economic development or short-run macro-economic stability
...
They have concluded from the evidence, that the
costs of low inflation are small
...
Most of the world’s current and past central bankers, for example, merit this
title whether they like it or not
...
They typically advocate more aggressively
expansionist policies than non-Keynesians
...
5
Paper by Cezanne Kooter
UGCCFE102 Macro Economics
Professor Jonas Ljunggren
27th of January, 2016
The promotion of the macroeconomic growth
The two different schools of thought
...
Here however, even some conservative Keynesians part company by
doubting either the efficacy of stabilization policy of the wisdom of attempting it
...
Bibliography
Economics Online
...
d
...
economicsonline
...
uk/Economic_schools
...
(2011)
...
investopedia
...
asp
Differences Between Classical & Keynesian Economics
...
d
...
chron
...
html
Keynesian Economics Definition | Investopedia
...
Retrieved January
26, 2016, from
http://www
...
com/terms/k/keynesianeconomics
...
- Boundless Open Textbook
...
d
...
boundless
...
Title: The Promotion of the Macro Economic Growth - Economic Schools
Description: Explanation about the Economic schools Class for Macro Economics
Description: Explanation about the Economic schools Class for Macro Economics