In his model of dual structure, the disguised unemployment or the Marginal Physical productivity of labor should be negative or equal to zero(MPPL=0, negative), implicating that there should be disguised unemployment in the economy. Therefore, the economy should be able to have unlimited supplies
Such form of society, recently emerged in the US, is , according to Piketty, “the peak of the income hierarchy dominated by very high incomes from labor rather than by inherited wealth” ( Piketty 265). As a result, such form of wealth accumulation is not necessarily binded to an industrial corporation rather income is, often, generated within the spectres of financial enterprises, much like the motto of
Throughout Karl Marx writings, capitalism is described as one of his major works. He defines capitalism as constantly revolutionizing amongst goods. Marx defines capital as the capitalist mode of production, a form of exchange, and a commodity. Marx asserts that the exchange of commodities is the beginning point of capitol. One other thing that Marx points out is the importance of money to capitol.
The fiscal policy is primarily an instrument in the hands of the government whereby it estimates its revenues and expenditures in the economy. This is a very important tool as it would define the flow of money from different sources, indicating the level of activity in the economy. It also defines the broad policies of the government indicating the outwards flow of money in to different sectors of the economy to maintain the overall health of the economy and fulfill its social goals. Apart from the fiscal policy every country has monetary policy at its disposal. This is primarily a tool at the disposal of the central bank of a country which uses different tools to manage the macro economic variables of a country to keep the economy stable or to stabilize it in situations of fluctuations.
It analyse the national goals of the economy, such as maintaining full employment, stabilizing the economy or pursuing the economic growth. A market, in an economic view refers to which buyers and sellers negotiate the exchange of specific goods. Markets can be distinguished into product
Classical economics emphasises the fact free markets lead to an efficient outcome and are self-regulating. In macroeconomics, classical economics assumes the long run aggregate supply curve is inelastic; therefore any deviation from full employment will only be temporary. The Classical model stresses the importance of limiting government intervention and striving to keep markets free of potential barriers to their efficient operation. Keynesians argue that the economy can be below full capacity for a considerable time due to imperfect markets. Keynesians place a greater role for expansionary fiscal policy (government intervention) to overcome recession.
Universally, free market economies exist to fulfill the wants or needs of consumers by supply and demand. People have the leeway to plan their own business by buying and selling goods without the government’s help. This is evident because a free market economy is solely based on the “laissez- faire” approach and self-interest which was introduced by Adam Smith. Although, free market economies may not be a completely perfect system, it contributes countless gains to society as well as individuals such as economic freedom, efficiency, independence, human rights, and many more within society which thus has shaped the world into what it is molded into today creating a legacy based on Adam Smith’s ideas. Adam Smith, a renown political
The Neoclassical theory states that the major cause of migration is different pay and access to jobs even though it looks at other factors contributing to the departure, the essential position is taken by individual higher wages benefit element. The Neoclassical theory involves the macroeconomic and microeconomic aspect. Macro focusing on structural factors and microeconomic focusing on an individual choice to migrate (Weiss, 2003). The macro theory is perhaps the most well-known approach explaining the causes of migration, it came from the theoretical model explaining internal labor migration in light of economic development (Corry 1996, Harris and Todaro 1970). According to the theory assumptions: 1.
In the discounted utility model, it is implicitly assumed that there is no satiation due to consumption that is carried over across time periods. Thus the utility of consumption in a period remains unaffected by the consumption in the previous period. So the assumption that the utility in each period is computed afresh may be reasonable if the time interval between two periods is relatively large. Thus the total utility is simply the sum of the discounted utilities. The problem automatically arises when the time interval between two periods is relatively small and there is a lingering effect of previous consumption on the experienced utility of the current consumption.
The basic premise of the classical theory of unemployment was that a market economy would ultimately and automatically move towards full employment. This widespread belief prevalent in the classical theory was based on the principle referred to as Say’s Law which basically states that “supply creates its own demand”. This essentially means that as firms generate output, they also generate enough income in order to absorb that output. Therefore, this belief in the economy’s ability to maintain full employment conditions when left to itself lead economists to adopt the principle of laissez-faire, i.e. of non-intervention by the government.