Explain demand management of keynesian economists, Macroeconomics

Assignment Help:

Explain demand management of Keynesian economists

The demand management of Keynesian economists of 50's and 60's is attacked by free-marketers for ignoring the importance of supply side and using fiscal policy as a blunt instrument to manage aggregate demand. Free-market economists warn against changing levels of taxation in a flexible way to manage aggregate demand particularly income and business taxes since this sends confusing messages to entrepreneurs and workers, distorting long-term labour market incentives.

Though this doesn't mean that there is no place for demand-side policies in supporting macroeconomic performance. Globalised market economy is disposed to to volatility and unpredictable economic crises. In the last 15 years UK economy has been considerably affected by stock market crashes comprising the Asian crisis 1997/98, the dot.com bubble and terrorist attacks of 2001 banking crisis in 2008 and deep global recession which followed this crisis.

In such periods there is a definite need for government action to prevent the economy plunging into a deep recession. The 'animal spirits' that Keynes warned of in the 30's still exist today. Certainly one of the greatest dangers is when a market becomes paralysed with fear. Had Labour's Chancellor, Alistair Darling, not intervened in British economy in October 2008 to bail out HBOS and RBS and inject billions of pounds into the financial markets to restore confidence, it's possible that entire British banking system and economy could have collapsed.

 


Related Discussions:- Explain demand management of keynesian economists

Law of diminishing returns, Explain the law of diminishing marginal returns...

Explain the law of diminishing marginal returns using the example of a factory which is currently running at half capacity and employs more staff

Describe short-run equilibrium price-demand, The aim of this task is to exp...

The aim of this task is to explore the effects of a supply shock on a firm and thereby on the industry. Suppose that war breaks out in the Middle East, where a considerable portion

Testing the hypothesis, An effort to reduce energy costs, a major universit...

An effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room

?k=s*f(k)-(?+n)k, y=vk ?k=s*f(k)-(?+n)k saving rate 28% population growth o...

y=vk ?k=s*f(k)-(?+n)k saving rate 28% population growth of 1% Have y persistent size s, n, g and ?function

What degree of elasticity does chipotle burritos exhibit, Economists estima...

Economists estimate the short run elasticity of demand for a Chipotle burrito is -2.25. i)    What degree of elasticity does Chipotle burritos exhibit? ii)    A 1% change in

Macroeconomic policy issues facing the u.s. economy, While referring to the...

While referring to the "EYE on YOUR LIFE" section on, discuss the macroeconomic policy issues facing the U.S. economy today based on the economic concepts you have learned in this

GDP, Calculate the marginal cost and marginal analysis for the following ta...

Calculate the marginal cost and marginal analysis for the following table. Calculate the answers and insert them into the shaded cells. Units Produces Cost per Unit Total Cost Ma

Kinked demand curve, disuss with an aid of a diagram the kinked demand cur...

disuss with an aid of a diagram the kinked demand curve

Farmer grows wheat and sells, A farmer grows wheat and sells it to a miller...

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd