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
Classical Growth Theory Adam Smith has founded the classical theory of economic growth based on the production inputs (Land, Labor and Capital). He has expressed his production function as follows: Y=f (L, K, T) Where Y stands for output, L in labor, K is capital and T is land. He considered savings as engine to growth hence it creates investment and also he released that the income distribution is major driven to the nation grow either fast or low. According to the classical theory, the variation in price level relates to its tax impact is not straight linked to the profit and output. The higher wage cost reduces the firm’s profit level and the relationship between inflation and output become implicitly negative (Gokal and Harfi (2004)).
Now the company put its foot into new market of event management. Company finds a new way to become more popular and generating the revenue. Team members of the project are motivated and build sense of achievement. The accomplishment of this project provides many benefits to the company. Besides having a higher reputation for events planning services, there will be a boost in company’s revenue and sense of achievement in employees.
Solow-Swan Model offered a new approach to estimating economic growth based on key factors of production. This research tested the hypothesis that the Solow-Swan Model effectively explains how countries attain a steady-state of economic development compared to previous models. It established that, by factoring the contribution of money in determining exogenous economic growth, the Solow-Swan Model is a comprehensive economic model. It concludes that Solow-Swan Model is an effective model for explaining exogenous economic growth as a factor of capital, population growth and technological progression. The earlier attempts to develop a plausible economic growth theory were used on using no empirical data.
Similarly, improved efficient financial markets promote economic growth resulting in net welfare gains. Firms can easily fund their operations and expand or improve their production and technologies. The outcomes are an increase in productivity and wages as well as new jobs leading to welfare gains in the respective
THE MODEL APPROACH: The model mainly focuses to show how consistent growth can be achieved in an economy through infrastructure, i.e., endogenously with the help of a production function that is linear on the stock of capital. The model which is presented here is an endogenous growth model: THE AK MODEL. The AK model is a departure from the simple Solow model of growth. The standard Solow model predicts that growth in the long run is achievable only through technological progress or increase in the savings rate which takes us to the level of steady state equilibrium.The major drawback of the Solow model is that growth can only be achieved by exogenous factors. However, by relaxing the assumption of the diminishing returns and in turn taking
Economic growth is main factor in individual lifestyle in and economy so if there is growth, reduction of poor living standards will occur. These enhances consumer spending because it increases incomes. An increase in workers real wage rates will result higher purchasing power of a worker and therefore these workers who are also consumers tend to increase their spending, which causes a rise in aggregate demand and aggregate supply in a long run, because there is an increases in aggregate demand and aggregate supply over time it results to growth in output from firms and therefore firms need to employ more workers for continuous expansion and as a result reducing unemployment. A rise in output will also result to improved and more efficient public services as consumer real wage rates increases so does direct taxes, which results to growth in tax revenues government can increase spending on education and health. With all these in place firms become more confident and are able to achieve product efficiency even with even market conditions and so they invest more, and as stated in the first part of this essay investments is a main source of economic
Vener’s conclusion is that the reason for the formation of customs union is efficient allocation of resources. Although his analysis was pioneering, the conclusion he made was incorrect. In other words, measuring welfare impacts of customs union using static
IMC enables reaching out to a company's target market audience in a consistent and effective manner that results in a higher turnover. Hence, the need for IMC is greatly
This is because people can have a choice of new and better varieties of goods and services. By consuming new and better varieties of goods, people can improve their standard of living. 5. Generate employment opportunities - Foreign trade helps in generating employment opportunities, by increasing the mobility of labour and resources. It generates direct employment in import sector and indirect employment in other sector of the economy.