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Tejvan Pettinger There are two main strategies for reducing unemployment – Demand side policies to reduce demand-deficient unemployment (unemployment caused by recession)Supply side policies to reduce structural unemployment / (the natural rate of unemployment) A quick list of policies to reduce unemployment: Monetary policy – cutting interest rates to boost Aggregate Demand...

No Other Article Explains the Economic Problem As Clearly F. A. Hayek PoliticsSocialismScarcityF. A. HayekSocialist Calculation DebateEssential If you want to learn as much as possible about economics from just one article, read Friedrich A. Hayek’s “The Use of Knowledge in Society,” published in the September 1945 issue...

Tejvan Pettinger “Nothing is so permanent as a temporary government program.” Milton Friedman, “Tyranny of the Status Quo,” (1984) p. 115 Friedman was a free-market economist critical of government intervention. With this quote, he was making the point that government intervention can invariably lead to government failure and inefficient use...

Tejvan Pettinger What are the advantages and disadvantages for a developing economy, such as Ghana if it is dependent on primary products? Definition of Primary products: Raw materials and resources used in the productive process. Examples include metals, agricultural products and minerals. Advantages of Producing Primary Products For many...

Taxes on negative externalities are intended to make consumers / producers pay the full social cost of the good. This reduces consumption and creates a more socially efficient outcome. If a good has a negative externality, without a tax, there will be over-consumption (Q1 where D=S) ...

Tejvan Pettinger Cobweb theory is the idea that price fluctuations can lead to fluctuations in supply which cause a cycle of rising and falling prices. In a simple cobweb model, we assume there is an agricultural market where supply can vary due to variable factors, such as...

Explanation of why government intervention to try and correct market failure may result in government failure. Summary Market failure is a socially inefficient allocation of resources in a free market. Market failure can occur for various reasons ExternalitiesDemerit/merit goodsPublic goodsMonopoly power Government failure occurs when government intervention results in a more inefficient...

Prabhat Patnaik The post-second world war years had seen systematic intervention by the State to stabilize capitalist economies. In fact State intervention had played the same role in that period that incursions into colonial and semi-colonial markets had played earlier, over much of the nineteenth century,...