Prabhat Patnaik May 31, 2019 Mainstream bourgeois economics which is what occupies a hegemonic position in the academic world today is often criticized for being “unreal”, for proceeding on the basis of assumptions that obviously do not correspond to reality. This criticism however, though valid, does not...
The natural or (equilibrium) level of unemployment is determined by calculating the level of unemployment when the labour market is in equilibrium. Diagram Showing Natural Rate of Unemployment The labour force includes everyone of working age who is either working or looking for work. The Aggregate Supply (AS)...
Tejvan Pettinger Poverty implies low income and struggling to meet basic needs. There are two main types of poverty Absolute poverty – income below a certain threshold necessary to meet basic necessities of life (food, shelter, clothing, rent)Relative poverty – Individuals receiving income a certain level (e.g. 50%) below...
Tejvan Pettinger A look at the main macroeconomic objectives (economic growth, inflation and unemployment, government borrowing) and possible conflicts between these different macro-economic objectives. The main macro-economic objectives are: Economic growth – positive and sustainable growth (The UK, long-run trend rate is around 2.5%)Low inflation (UK target 2% +/-1) –Low...
Tejvan Pettinger Price discrimination involves charging different prices to different sets of consumers for the same good. Firms can charge different prices depending on several criteria: Quantity bought (e.g. lower unit price when higher quantity is bought)Time of use (higher price at peak times)Age profile (e.g. discounts...
Tejvan Pettinger Economic development implies an improvement in economic welfare through higher real GDP, but also through an improvement in other economic indicators, such as improved literacy, better infrastructure, reduced poverty and improved healthcare standards. Policies for economic development could involve: Improved macroeconomic conditions (create stable economic climate...
Tejvan Pettinger Readers Question: how does a current account surplus affect domestic employment? A current account surplus means an economy is exporting a greater value of goods and services than it is importing. A country with a current account surplus will have a deficit on the financial/capital account. i.e....
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...