Question

under classical, keyness and supply-side

1. what causes unemployment

2. how can the economy be fixed

3. practitioners

4. 1970s stagflation

Answer 1

1)Classical economist: accept that any employment or joblessness that happens in the labour market or in other asset markets ought to be viewed as deliberate joblessness. Intentionally jobless specialists are jobless in light of the fact that they will not acknowledge lower wages or Classical joblessness happens when genuine wages are kept over the market-clearing wage rate, prompting an overflow of work provided.

Keynes accepted that joblessness was brought about by an absence of consumptions inside an economy, which diminished total interest.

Unregulated economy gracefully side strategies

Lower benefits increment the motivation to find a new line of work. It is contended liberal joblessness benefits make a joblessness trap, where those on advantages would get just a little expansion in after duty pay in the event that they chose to work.

2) classical economist want to create employment by monetary incentives or policies and increase money supply to create aggregate demand in the economy.

Keynesian :government need to use fiscal policy to create aggregate demand and increase employment by increasing money supply.

Supply side focus on any ways which promote or boost production like investment, capital etc more and more thus more employment generation as a result aggregate income increase and demand also increase.

3) practitioners:

Classical: ricardo, stuart mill, Adam Smith

Keynesian economic practitioner John Menard keynes,

4) 1970 stagflation:

Stagflation in the 1970s

This was caused by the oil price boom and also end of the Barber Boom. This shows how in the 1970s, the USeconomy faced a worse trade off- there was higher inflation and higher unemployment. The Phillips Curve was shifting to the right.

Classical: higher unemployment as demand for higher wages , but economy performance was bad as well as higher inflation in some sector due higher cost of production.

Keynesian: government has little to spending as tax collection was lower and thus fiscal policy also not working which cause unemployment and sector of economic also have diseconimic of scale.