What is the difference between Keynesian and classical economics?
Ok, this is actually Austrian and Keynesian.Yet it’s fun and cool :)CLASSICAL ECONOMY: Market works best when it is left alone. Any intervention or too much regulation or influence or simply anything government does above the scope of what is necessary to keep the market free, fair and lawfully just is harmful since it disturbs natural flow of supply and demand, which are the best real indicators of what people want.KEYNESIAN ECONOMY: Market is flawed, real market (in opposite to perfect market) is unstable and full of disturbances which are caused by many factors (lack of information, wrong information, monopolistic forces (ability of suppliers to influence the price outside the S/D equilibrium in their favor) and so on). As such, interventions are needed to correct it’s oscillations and to keep it as smooth as possible. (Active monetary policies of central banks, government spending even on short term loans in bad times repaid in good times, government financial incentives, active tax policies…)Both of these concepts are actually outdated and wrong.They are both right in very general terms.Classical economy is right - government usually screw up the market since it is run by politicians and politicians a) usually do not understand economy that much and b) have even other interests than economy itself they smuggle inKeynesian economy is also right - market is flawed and it needs interventions from time to time - but the original extend and kind of interventions which were supported by original Keynesian economists are not all that good.We’ve got new theories now and the major once actually naturally evolved from these two (and they are, very originally, called like “neo-keynesian” and such… really, people should be more inventive with names. Still better than medicine and psychology with it’s “A and B personality type” and “alpha and beta brain waves” and so on, but still quite boring). Describing them wouldn’t be easy (lots of mathematics inside).(This doesn’t mean original theories were bad - as well as physicists do not use Newton but Einstein to calculate trajectories of celestial bodies - it doesn’t mean Newton was completely wrong, it just means Einstein is much better - but Einstein couldn’t be without Newton).Here you have follow-up “episode” for more fun and info :)
Difference between GDP, Real GDP and Economic Growth?
I have an economic data sheet to fill in certain economic indicators - and these are three of them. Can anyone tell me briefly the difference between these three, and what I should be looking for, e.g percentage or amount of money? Researching for USA, UK, Eurozone and China - finding it hard to fill out the whole sheet - any recommended websites with economic data on these areas? Thanks
Briefly explain why Keynesian economics is most successful?
And... why it's overall more effective than supply side economics? Please don't use hard to understand terms. I need it explained like I'm a little kid. Thanks so much!
What are the three types of economic system that exist in the world?
So you have the free - market economy, aka capitalist or laissez fair. This is where the government doesn’t run things, the allocation of resources are handled by the private sector (businesses, corporations etc). Then you have the communist, where the government is in full control of the allocation of resources. This is like Cuba with Castro, and Venezuela. Then you got the mixed market economy where you have intervention from both the govt and private sector. There are other economic systems which arent very popular, like the traditional system. This one doesn’t use money as currency, they use the old barter system where they trade their goods for other goods. Only like 2 or 3 countries have this
What is the contribution of three sectors to the GDP of the Indian economy?
Indian economy has 3 broad sectors. Primary deals with agriculture and basic commodities, Secondary constitutes of industries/processing and Tertiary comprises of the services sector.Traditionally we are an agrarian society, it is reflected by the fact that even in 2014: about 49% of our workforce was employed in Agriculture and allied activities like forestry and fishing. The primary sector is most affected by Disguised Unemployment which is characterised by additional hands to do a job without additional returns in terms of productivity. The Primary sector contributes to only 17% of the GDP.Secondary sector such as industries and processing employs about 22% of the workforce with around 26% contribution to the GDP. With globalisation and technology led business growth, this sector has drifted from being a labour intensive sector to lesser reliance on manpower.Tertiary sector is the biggest beneficiary of globalisation and open trade. Indian services bring her more than 60% of GDP while employing less than 27% of workforce. While, this sector has witnessed highest relative growth in terms of GDP, it has not led to commensurate growth in employment. This is termed as “Jobless Growth”You can look at the graph below while considering the trend in employment is almost opposite.All statistics are ballpark estimates of 2012–2014. Chart from Wikipedia.
What are the similarities and differences between money and other commodities?
The main uses of money are as a medium of exchange, a unit of account, and a store of value. So one main difference is that money is durable. It will last a long time, sure a loaf of bread is worth something... but it will mold so it violates that rule of storing value. And although commodities are worth something they must be widely accepted as a medium of exchange.
What are the 3 stages of production in economics?
Stage OneStage one is the period of most growth in a company's production. In this period, each additional variable input will produce more products. This signifies an increasing marginal return; the investment on the variable input outweighs the cost of producing an additional product at an increasing rate. As an example, if one employee produces five cans by himself, two employees may produce 15 cans between the two of them. All three curves are increasing and positive in this stage.Stage TwoStage two is the period where marginal returns start to decrease. Each additional variable input will still produce additional units but at a decreasing rate. This is because of the law of diminishing returns: Output steadily decreases on each additional unit of variable input, holding all other inputs fixed. For example, if a previous employee added nine more cans to production, the next employee may only add eight more cans to production. The total product curve is still rising in this stage, while the average and marginal curves both start to drop.Stage ThreeIn stage three, marginal returns start to become negative. Adding more variable inputs becomes counterproductive; an additional source of labor will lessen overall production. For example, hiring an additional employee to produce cans will actually result in fewer cans produced overall. This may be due to factors such as labor capacity and efficiency limitations. In this stage, the total product curve starts to trend down, the average product curve continues its descent and the marginal curve becomes negative.To receive advices while signing up, use this FAQSSource: Three Stages of Production in Economics