How can economic growth be stimulated according to the Neoclassical view? By government intervention By the use of active fiscal and monetary policy . By leaving the markets function alone, without government involvement de By using demand-side economics
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- Why does neoclassical economics emphasize growth?In a neoclassical (Solow) growth model, does a decrease in the savings rate permanently affectsthe growth rate of real output? Why or why not? Explain and show graphically.What are the principal differences between the Neoclassical and Keynesian approaches with examples
- One practical limitation of the Classical or Neoclassical model is that it suggests allowing the economy to self-correct in the long run, but recessions may last a very long time. How severe is this problem and why? What is one example?Linear stages theory, Structural-change model (Lewis two-sector model), International dependence/dominance model, Neoclassical model How do the contemporary models differ from the previous models? Coordination failures ComplementarityWhy do these models emphasize multiple equilibria and what does it mean?What problems may prevent economy from moving from a bad equilibrium to a stable one?Need to understand that graphWhat are the big push and O-ring theories (important to have a broad or general understanding ofthe two theories?)Q3. The Lewis-Fei-Ranis model of economic development with unlimited suppliesof labour is a neoclassical model that was used to explain the development processin the LDCs. Discuss its limitations and how relevant it is in explaining their dualstructures.
- Write a word defense of either the Keynesian perspective or the Neoclassical perspective of economics. Which worldview makes the most sense? You are encouraged to relate your explanation to specific examples, politics, the fashion industry, your own life, etc.Compare the similarities and the differences between the Economic Growth concept by the Neoclassical School of Thought with Keynesian System for Economic Growth.What is neoclassical growth model of economic growth?
- Consider an economy in which production is characterized by the neoclassical productionfunction:Y = K0.5N0.5Suppose that it has a saving rate (s) of 0.1, a population growth rate (n) of 0.02, and an average depreciationrate (d) of 0.03.a) Write this production function in per capita form, and find the steady-state values of per capitacapital k and per capita output y.b) At the steady-state value of k, is there more or less capital than at the golden-rule level?c) Determine what saving rate would yield the golden-rule level of capital in this model.The belief that we can spend our way out of low growth is inconsistent with the best availableempirical evidence and ignores South Africa’s recent poor performance in using governmentspending as a tool to unlock much‐needed economic growth. Gambling with our future on riskyeconomic strategies that have failed elsewhere is something we are not prepared to do.’ TitoMboweni is South Africa's Minister of Finance. The increased government spending noted in Q.3.1. above has to be financed inone way or another. Describe three ways in which government spending can be financed.Review the fundamental microeconomic assumptions on the consumers’ behaviour within the neoclassical model. What are the main strengths and the main limitations of those assumptions? Discuss with theoretical and applied evidence.