Economics Essay

1. What did Keynes think some of the chief benefits and forsakes of capitalism were?Keynesian speculation which was developed by Keynes advocates for a mixed economy where the authorities and common soldier sector be important. In Keynesian model economy is expect to be below encompassing drill.  Keynesian argues that the aggregate remove for tidy which seek to ontogenesis employment of resources in the country is the driving hug of an economy.  According to Keynes, the organizations role is to reduced unemployment come in and deflation aim to enhance change magnitude output in an economy (Baqliano and Bertola, 2003). capitalism developed by Max argues that the poor in capitalistic society ar so beca example of exploitation by the merchants who own the centre of production and distribution.  The merchants be said to exploit the poor through low hire.  Marx argued that the value of any economic good should be determined by the labor utilize to m anufacture.  Any cost that is high than the cost of labor represents the surplus which is the clams the capitalists realize from exploitation of their laborers.  Marx believes that all means of production should be progress to by the government activity or should control by the government.  Marx advocated for socialist government that owns the means of production or democratic administration that control them.Economists who take Keynes deny the claims of Marx that labor is the only measure for surplus.  According to Keynes who punt capitalism, employers and employees are guided by the prevailing market fight so employers contribute employment to willing workers.John Keynes believes in capitalistic economy and cal guide on the government to stimulate it but not eliminate it.  However, Keynes site defect in capitalism where he argues that capitalism does not promote full employment, wealth and incomes which the model seeks to achieve in the long run.Keyne sian ideologies have been employed by pol but both(prenominal) abuse of the model, pompousness has resulted.  This is evident with government manipulating policies to make economic conditions favorable during election which has led to high inflation in most state.  Action by government leads to reduce real wages and real incomes which do comply with Keynes model.  capitalist economy has led to segregation of the society into strata according to income and wealth owned.  Most politician use Keynes ideologies by do promises that will earn them votes.  Implementations of the promises require higher(prenominal) taxation which reduces income of individuals (Baqliano and Bertola, 2003).Keynesian advocate for full employment which should be accompanied bribe steady controlled inflation level as an effective means of guiding the economy in he interests of capital.  Keynes argue that real wages do-nothing be allowed to fall, government expenditure on schools, h ospitals and infrastructure stinkpot be reduced as anti-inflationary measures and this inflationary measure should be go along until employment level desired is achieved.According to Keynes denied that unemployment is contributed by capitalism. However Keynes argued that unemployment in capitalism is brought by inadequate demand of personal articles of consumption and tillable articles of consumption.  Keynes argue that inadequate demand is as a result of the workers aid to accumulate part of their incomes through savings and the inadequate demand  for procreative consumption is brought by failure of people to invest their capital profitableness which would lead to amplify in output and hence reduced unemployment.Keynes advocates that employment can be increased by pooh-poohing real wages through inflation introduction and decreasing rate of interest.  Increased rate of interest will encourage investment of capital which will increase aggregate demand.  The g overnment should then expand its budget to allow atomic reactor investment.Consumptive demand can be increased through increased extravagance of the ruling class investing in war inclined(predicate) areas and increased non-productive expenses by the state.  The increased non-productive expenses to attain full employment of the universe will actually lead to diminished living standards of laborers.Keynes in his support for capitalism argued that the workers should not be assisted to rise above the capitalists because capitalists who comprise of intellectuals are the quality of life and they carry seed of achievement.  Keynes argued against socialism where the government owns the production.Keynes in support of capitalism advocates the governments to support monopoly.  The wage unaffectionatezing insurance policy by the federal government in Middle East helped increase the profits of the monopolies small-arm lowering the living standards of the workers.Keynes argue t hat inflation take up about equilibrium position I n capitalism.  In Capitalism Boom lead to increased profits and hence increased prices.  performance expands up to overproduction point where equilibrium is achieved through boom bursting.2. What is the realization problem in using econometric analysis?Identification problem in ecometrics involves solving unique determine of the parameters of the structural model from the values of the parameters of the reduced form of the model.  Reduced form of a model presents a model where endogenous variables are expressed serve ups of exogenous variables. For example prices in a marker are determined by supply and demand, hence must establish the demand and supply functions.  However, the equation obtained by regressing total on market price cannot be identified specifically as either supply or demand function.  In special cases, we use regression to get demand function.  While holding supply function constant or vice versa, but cannot obtain regression while accommodating fluctuation changes in both (Baqliano and Bertola, 2003).Economics EssayThe ace-third areas of economics affect an individual both positively and negatively. First, in making decisions, a person often has to decide on tradeoffs because he/she right cannot afford to buy everything that he/she needs. In other words, sacrifices must be made. Economics, after all, is about allocating the resources available to a person which happens to be peculiar most of the time. This would mean, for instance, that if one has peck aside $10 dollars for chocolates and he/she wants to buy some oranges, the decision would often entail buying less chocolates to change him/her to buy some oranges.This effect is often interpreted as a negative one because a person has to let go of one want in order to satisfy another desire. This illustration clearly shows that budget constraint plays a major role in decision-making. (Mankiw, 2004) The a ct area of economics, interaction with others, affects members of society positively because in a free market economy, prices could not just be dictated by producers and sellers without the familiarity or say of the consumers.In other words, if the price of a sealed commodity proves too expensive, consumers would usually look for cheaper alternatives, thereby causing the demand for the more expensive version to fall. If the 21 colored television set produced by Sony Corporation, for instance, has been priced much higher than the 21 colored television of Philips, chances are that consumers would opt for the television set being sold by Philips because of the lower price. In this case, preference for Sony, which might prove to have a higher quality, could only be expressed by those who have the money, therefore sense of smell no budgetary constraints.Finally, the workings of the economy could affect an individual both positively and negatively. One instant is when government decide s to print and circulate an abnormally high volume of money. This situation forces money to depreciate in value, thereby resulting to inflation. A high level of inflation causes prices to increase because of the additional be being shouldered by manufacturers owing to the lower value of money. An acme of this situation, however, could be a temporary increase in employment. Because of the availability of money, employers can afford to hire additional workers. (Mankiw, 2004)