Financial Crises and Economic Growth
1. Economics has been described as “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” According to the economists we’ve read, what are the most important means for economic growth, prosperity, or stability? How did views toward those means evolve over time? How can the end results of economic activity be fairly distributed? What role does nature play in determining means and ends? (350 words)
2. In his General Theory of Employment, Interest and Money, John Maynard Keynes examines the effects of spending, investment and labor on an economy. According to Keynes, what factors determine the state of an economy? To what extent should governments intervene in economic activity? How are Keynes’ ideas similar to or different from those of Ricardo, Mill, Jevons or the other economists we’ve considered? What factors does Keynes fail to recognize in his analysis of economic health? (350 words)
3. Discussion :comments and questions regarding the Keynes reading.(100 words)
4. W. Stanley Jevons and Thorstein Veblen address consumption patterns in industry and leisure, respectively. Why, according to these authors, do we consume particular commodities or goods? How do these authors’ views relate to or differ from Marx’s notion of use-value or surplus-value? Can these views be useful for addressing contemporary concerns such as sustainability or income inequality?(300 words)
5. discussion: comments and questions about Q4.(100words)
5 Questions
Student
Institution
Course
Professor
Date
5 Questions
Question 1
Economic growth, prosperity, and stability aim to ensure that there are minimal financial crises and anomalies in economic activities. Moreover, an economy is deemed stable if high inflation is avoided. According to the economists, we have read, economic growth and stability entail numerous economic activities, which is a multilateral concern of various stakeholders. The first aim of ensuring economic stability is creating an enabling environment for investment. This will ensure that "a decline in income due to a decline in the level of employment" is avoided (Keynes, n.d., p. 195). With a conducive environment for investment, people will have sufficient income to meet their needs and support economic activities. There should also be proper policies to support these investments. These means will ensure that all attain economic growth, prosperity, and stability.
The views toward these means have evolved significantly. This is because of the changes in the environment as well as the social, economic, and political contexts over time. Some of the aspects that led to the changes include the “economy of labour effected by the introduction of new machinery, which has forced many people out of employment" (Jevons, 1865, p. 103). Therefore, instead of relying on their labor provision, other means of engaging in economic activities. Another aspect that has made the means of achieving economic stability evolve is reducing taxes and tolls, which increases the net revenue of workers. These are some of the introduced changes that contribute to economic stability, prosperity, and growth.
Fair distribution of the results of economic activities is vital in society. The results can be fairly distributed are based on the income levels of different members within the society. It is vital to ensure that there is income mobility and members of the society can easily climb through the different stages of the economic classes (Estrin & Marin, 1995). The earning power of the people must be growing as they engage in more economic activities.
Nature is an important factor in the economy. It determines the resources for economic production as well as the means through which these resources can be utilized. Therefore, nature determines the means of attaining economic stability, prosperity, and growth. Through nature, individuals also understand their needs as they scramble for scarce resources or opportunities within a specific environment or context.
Question 2
Keynes focuses on the association between investment, saving, and liquidity based on the General Theory of Employment, Interest and Money. Usually, saving and investment are equal, but factors influence how an individual makes decisions concerning these aspects. Keynes also assesses the impacts of labor in the economy, highlighting how employment contributes to consumption, investment, and production. Therefore, based on Keynes, the factors that determine the state of the economy include the demand and supply of money. This affects interest rates as well as the levels of liquidity within the economy. Moreover, these aspects interact together to contribute to the economy's investment, production, and consumption levels.
The economic state is usually determined by numerous parameters, including money supply, demand functions, liquidity, and capital efficiency. These are important aspects that should be controlled through government interventions. Therefore, the extent of government intervention is creating conducive policies for the money supply, which also affects the consumption, production, and investment within the society. The government is responsible for controlling the supply and demand of money based on income levels and interest rates.
Keynes's ideas are similar because they are based on the mechanics of utility as well as self-interest within the economy. Also, Jevon agrees with Keynes on the role of intervention in the economic aspects within the society. Jevons presents the market in an abstract format despite the similarity, unlike Keynes, who considers the various forces at play and the potential changes.
When compared to Ricardo and Mill, Keynes majorly focused on the short-term challenges because most issues were perceived as immediate that should be handled through policy interventions and guarantee long-term growth. On th...