The Is Critically Examine The Debate Between Keynesian And Classical Economists On The Atttaintment Of Full Employment In The Economy With Reference To The Real World Events Such As The Great Depression And Stagflation

Employment 1Full EmploymentDebate between Classical and Keynesian Economists on growth of Full Employment in the EconomyEmployment 2One of the major important questions that macro instruction economics deals with is what determines the levels of employment in an economy . There be many opinions and suggestions regarding this issue . Opinions also differ as whether the establishment should play an active map in managing the economy or its role is limited to simple monitoring . These contrastive opinions ar inspired by different initiates of economy viz . the Keynesian school and the Classical school . The Classical school believed that capitalistic , merchandise oriented economics naturally tended to become at dear employment , where as the separate Keynesian school deals with the different views relating to how aggregate demand is determines and its relation with entire employment in an economy Classical view of EmploymentThe debate regarding the G everyplacenment role in the market economy s movement towards long-run , full-employment , residue has been going for more than two centuriesSome economists like Adams smith , J . B . Says , etc . stressed the role of self collecting forces in the economy . These economists are known as classical economists . agree to the classical approach prices and net incomes are elastic to adept another and the economy is stcapable . The economy moves automatically and apace to full employment equilibrium without any intervention from the political sympathies . Thus the basic contention of Classical economists was , that if wages and prices were flexible , a competitive market economy would always ope direct at or near full employment - i .e . economic forces would always be generated so as to witness that the demand for projection was always , equal to its supply .

In Classical model the equilibrium levels of income and employment were supposed to be determined largely in the labor marketThe demand bias for labor shows the relationship between real wage (equal to the judge of marginal product of a labor in a competitive economics ) and the demand for labor byEmployment 3employers the lower the wage rate the more the workers will be employed . This is why it is downward sloping . The supply curve of labor on the other hand is upward sloping for obvious reasons - the high the wage rate the supply if laborThe Classical economist presume the flexibility of wages and prices (or of real wages . They believed that , if the wage rate was flexible , a competitive economics would be able to maintain full employment . In other language , aggregate demand would be sufficient to absorb the full capacity output in economy . In point , whatever the full employment level of output , income generated in creating full employment will necessarily lead to consumption which will be sufficient to by the goods produced . In other words the classical economists denied the possibility of under spending and over producingThe classical economists were highly inspired by the impact of the industrial revolution on the economy , i .e , division of labor , capital accumulation , and growth of international trade . They viewed product line cycles as temporary and self correcting...If you want to get a full essay, order it on our website: Ordercustompaper.com

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