Research economic debates regarding the Classical Keynesian

Research economic debates regarding the Classical, Keynesian, and Monetarist theories.

Then answer these questions-

What evidence have you discovered that points to the Classical, Keynesian, and Monetarist theories being debated today?

What is supply-side economics? Does it oppose the Classical, Keynesian, or Monetarist theory? How does supply-side economics affect fiscal policy?

What are the stakes in terms of economic growth and per capita income in the United States?

Analyze the impact of economic growth and per capita income measurements. For example, how much difference would every 1% of faster growth make over five years, or every 1% of unemployment?

Discuss differences in the types of incentives that economists propose for increasing economic growth.

Do policy makers believe these can be applied to strategies for stimulating the employment? Why or why not?

Solution

The role of government intervention in runnning the economy efficently is the evidence that points to the Classical, Keynesian, and Monetarist theories being debated today as both the Keynesian and Monetarist theories emphasize on the role of the government in terms of fiscal and monetary policies respectively while the invisible hand theory of tthe classical economists is not found to be much relevant at present times.

Supply-side economics is a macroeconomic theory which says that economic growth can be most effectively created by investing in capital, and by lowering barriers on the production of goods and services.

Supply side economics is based on Say\'s law that supply creates its own demand. It opposes classical, Keynesian and monetarist theory in the way that supply siders believe that producers and their willingness to create goods and services set the pace of economic growth while the theorists believe that consumers and their demand for goods and services are key economic drivers.

Supply-side economics argues that increased taxation steadily reduces economic trade between economic participants within a nation and that it discourages investment. Taxes act as a type of trade barrier or tariff that causes economic participants to revert to less efficient means of satisfying their needs. So according to suppy side economists, taxes should be reduced to bring economic efficiency and growth.

The stakes in terms of economic growth and per capita income in USA are:

a) lower prospects for U.S jobs

b) increase of less skilled workers

c) dollar becoming stronger

d) lower productivity growth

The impact of economic growth and per capita income measurements in tthe long run are asfollows:

a) quality of life increases

b) increasing equality in income

c) more equitable growth

Economists propose to create jobs for increasing economic growth, i.e., to create more employment in form of public investment and government spending.

Policy makers do not believe that this strategy can be applied to their growth strategies, instead, they emphasize on tax cuts and reducing the burden of taxes because they think that jobs by cutting taxes can be more than offset by the jobs lost as a result of cuts in public services.