As aggregate demand affects the supply (production, employment and inflation) they saw it as the government's role to build it back up using monetary and fiscal policies. Similar to Classical economists, Keynesian believe the economy comprises the same part: consumer spending, government spending, and business investments. However the major difference is that Keynesians believed government spending could help account for the lack of consumer spending and investment. The Keynesian theory also was based on the idea that wages and prices were sticky and that is would give aggregate supply a horizontal line in the short run. Overall, the main idea of the Keynesian Economist was to save and create jobs and
There was a severe economic depression in all the countries of the world, be it rich or poor, in the decade prior to the Second World War. It emerged because of the fall in stock prices in the United States of America, which began on 6th of September 1929. This news became famous with the Wall Street crash, also known as the stock market crash of 29th October 1929. This day came to be known as the Black Tuesday in the world history. Debt deflation, also known as worst deflation or collateral deflation is the theory of economic cycles, according to which, recession and depression in the economy are due to the overall shrinkage of debts.
By an increase in real income, we simply mean the ability to reach a higher level of preference - a capability that obviously exists if the price of one good decline and all other prices remain constant. An increase in the consumer’s real income will have an effect on the rate at which he or she wishes to consume a particular good; we refer to this effect as the income effect. An increase in real income will cause an increase in the desired consumption of a normal good and a decrease in the desired consumption of an inferior good. In the case of a normal good, the income effect is said to be positive; in the case of an inferior good, the income effect is negative. Independent of the income effect is the fact that a decrease in the price of one good will reduces the price of that good relative to the price of all other goods, if all other prices remain constant.
The author in this article focuses his research and analysis mainly on Veblen, who introduced the term neoclassical to economics. Neoclassical economics is defined as an approach to economics that relates demand and supply to someone’s rationality and the individual’s ability to capitalize on profit (Investopedia, 2018). Lawson argues that Veblen’s introduction of the term also is to distinguish a way of thought that is characterized by having a certain level of ontological awareness while preserving with a methodology inconsistent with the awareness (Lawson, p
The American Great depression has been a predominant discussion point in the field of Economic History and is still considered the longest most unembellished depression ever experienced by the industrialised western world. It sent Wall Street into trepidation and whipped out the majority of American investors. The Great Depression was seen as cataclysmic period for America where there were declines in consumer demand and misguidance within governance which transmuted to an increase in financial anxieties around the state. The Great Depression left a plethora of unemployed people in the US, an approximate of 13-15 million citizens which was just more than 20% of the American population at the time. Economists had realised the paramount importance
Its alleged successes in the early 1980s, in particular the rapid disinflation and the flattening of the Phillips curve, were obtained through a harsh redistribution of income and power from workers to entrepreneurs, and from the poor to the rich. The neoliberal policy makers sought greater flexibility in labour markets and industrial relations by increasing the precariousness of jobs and by reducing the rights of workers. What neoliberal advocates considered a success for the economy as a whole, and was certainly a success for most entrepreneurs and shareholders, was instead an epoch-making defeat for blue and white collars that started the decline of the middle and lower classes. Moreover, this alleged success from the point of view of macroeconomic performance materialised only at the cost of serious side effects that in the longer period would have provoked the outbreak of the recent crisis. First, the transfer of power from labour to capital soon translated in an analogous transfer of income and wealth within most OECD countries and many developing countries adopting similar policies.
Investment changes cause changes in output and productivity as well as income through the multiplier process. Keynes was of the view that monetary policy works by influencing interest rates which influence investment (Amacher 2003) Keynes further postulated that the only way to know how monetary policy works is to know how the relationship between price of bond and its yield. Keynes was also of the view that proper role of monetary policy is to supplement fiscal policy, he further illustrated that suppose the economy is at less than full employment level, increase in government spending or a cut in tax will drive income up. If federal force (CBN) allows interest rate to rise at this time, then investment will fall, offsetting the expansionary effect of the rise in the government spending or cut in
For example, Obeidat (2012) and others in the theoretical literature found that the functions re-design is estimated to provide HRM with a better opportunity to impact on strategic decisions in order to eventually improve organisational performance. These functions are: human resource planning, staff development and regulatory compliance, benefits administration, performance appraisal, and recruitment and selection. HRM practices affect the employees’ skills by focusing on development capital in the company, and through recruitment procedures which can secure a large group of qualified applicants for a job. When able to provide employees of the highest calibre, HRM will have an influence on the quality of work and the skills of the employees in action. The provision of formal training and informal employees will improve the quality of the work submitted and will increase the employees’ work experience, and therefore increase capital and further influence employees and development (Huselid, 1995).
High interest rates invite inflation by encouraging consumers to consume more and save less. This will increase the demand for goods produced and hence firms and manufacturers will produce in excess to capitalize on the high demand. High production will lead to goods produced in excess not getting bought and hence destabilizing the market since the business people will want to cut losses and will lower prices drastically hence inflation and making it a necessary evil to engage the production units of a country. Inflation has many different effects that make it to be dubbed a necessary evil. One of these effects is the continued surge in prices while salaries and wages of middle income earners continue to be the same.
it also plays a central role in nurturing and strengthening the competencies, and in this way it becomes part of the backbone of strategy implementation. In addition, rapidly changing technologies require that employees continuously hone their knowledge, skills and abilities (KSAs), to cope with new processes and systems. 3. Developmental assignments: mangers have to good job of providing developmental assignments to employees and ensuring their job duties and requirements are flexible enough to allow for growth and learning. Other trends towards empowerment, TQM, teamwork, and interpersonal business make it necessary for managers, as well as employees, to develop the skills that will enable them to handle new and demanding assignments.