The position of Keynes and classical school about wages, prices, and Say’s law of market.

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Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

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16:10 ← BEC 3701 - Assignments-... KWAME NKRUMAH UNIVERSITY TEACHING FOR EXCELLENCE SCHOOL OF BUSINESS STUDIES DEPARTMENT OF ECONOMICS AND FINANCE ADVANCED MICRO-ECONOMICS (BEC 3701) Assignments INSTRUCTIONS: Check instructions below: LTE 1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of the following: a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks] b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks] c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks] d) the Expenditure Function E(P1, P2, U°) [3 Marks] e) Draw a diagram of the solution. There should be two graphs, one above the other; the first containing the indifference curves and budget constraint that characterize the solution to the consumer's choice problem; the second characterizing the demand…

Answer 2

Question

100%

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

100%

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

100%

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

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Answer 6

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Answer 7

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

Answer 8

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

Answer 9

Chapter 10, Problem 1QP

To determine

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Answer 10

Expert Solution & Answer

Explanation of Solution

According to the classical economists, the economy is always self regulating and does not need any intervention of the government to control its activities other than providing military support. Thus, they demanded the Laissez-Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Thus, the wages and prices are freely flexible under the classical ideology and Say's law of market states that the supply always creates its own demand leading to equilibrium between the demand and supply.

However, according to Keynes, the economy should not be allowed to freely fluctuate the prices and wages, as it will take long years to derive a new equilibrium as well as the money market will not allow Say’s law of market to hold true for the economy. The money acts as a medium of exchange as well as a medium of storage and differed payments, which cause the demand to fall and the savings to increase. This might lead to Say’s law of market to become false and there should be a regulatory to regulate and lead the economy toward equilibrium condition as soon as possible.

Thus, the classical economists argued for the Laissez-faire economy with the strong power to Say’s law market, whereas the Keynes does the inverse.

Answer 11

Expert Solution & Answer

Answer 12

Expert Solution & Answer

Answer 13

Economics Concept Introduction

GDP: The GDP is the gross domestic product of an economy, which is the summation of money value of all the goods and services produced within the domestic boundary of the economy.

Answer 14

Ch. 10.1 - Prob. 1ST Ch. 10.1 - Prob. 2ST Ch. 10.1 - Prob. 3ST Ch. 10.2 - Prob. 1ST Ch. 10.2 - Prob. 2ST Ch. 10.2 - Prob. 3ST Ch. 10.3 - Prob. 1ST Ch. 10.3 - Prob. 2ST Ch. 10.3 - Prob. 3ST Ch. 10.4 - Prob. 1ST

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Solution Summary: The author explains the position of Keynes and classical school about wages, prices, and Say's law of market. The classical economists argued for the Laissez-Faire economy where the economic transactions of the economy are free

The position of Keynes and classical school about wages, prices, and Say’s law of market.

Explanation of Solution

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