(4 Marks) Neoclassical economists believed that market economies were self-adjusting and concluded that prolonged recessions were an impossibility. What is the basis of this argument?
This statement is completely true, that the new classical economists believe that market economy was self adjusting and concluded that prolonged receptions for an impossibility. So the few arguments which are in favour of this statement are as follows:
Here the economy is self adjusting, which means that if you provide the supply in the market then definitely some demand will be created in the market and it will fulfil the needs for all types of markets.
Type of production on the basis of few market requirements, as it is very important to consider the market requirements and to regularise the availability of products, because if the product is regular in the market then definitely it will give some positive demand in the economy.
That stage of demand is directly on the basis of the requirement of the consumers. Therefore it is important to understand the situation of market by taking some market research in the economy.
It is also on the basis of JB Say a market long where the supply creates its own demand and on the basis of this situation, continuous recession is not possible because, if there the continuous decision making is possible then it means that all the economies are going to destroy and the concept of monetary economy and the existence of money supply in the economy will remain of no use.
There are three concepts, production, consumption and exchange. They always move in an equal direction as per the demand requirement in the economy. Therefore it is quite impossible that decisions are true long in the economy and it is supported by the statement on J B Say that the supply creates its own demand.
(4 Marks) Neoclassical economists believed that market economies were self-adjusting and concluded that prolonged recessions were...
Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between international trade and domestic trade More complex context More difficult and risky Higher management skills required 3. Basic concept s relating to international trade Visible trade & invisible trade Favorable trade & unfavorable trade General trade system & special trade system Volume of international trade & quantum of international trade Commodity composition of international trade Geographical composition of international trade Degree / ratio of...