Neoclassical Economics Vs. Keynesian Economics - 1583 Words

The post -Second World War growth period, which is called Golden Age of Capitalism, has a great influence in human economic history. During the period of time, a great many of the capitalist countries have dramatically increased their economy and prosperity, such as United State which has a substantially economic expansion at an average rate of 3.5% annually between 1945 and 1970. Economic growth may be resulted by deregulation of market, rise of automotive manufacture and industrialization which contribute to freight transportation, international corporation and emergence of innovation.However, this prosperous period has not sustained permanently. 2007 global economic crises, which is a global financial breakdown and increase†¦show more content†¦It means that the final price, which is negotiated between sellers and buyers, would satisfy both trade participants. Moreover, Marshall states that law of demand and consumer choice plays an important role in determining the commo dity price.For instance, price of goods always is smaller than marginal benefit of the consumer if there are lots of producers and consumers in a competitive market. Furthermore, perfect competition force many firms to reduce their production cost and use efficient production way because the sellers can set a lower price compared with their rivals which would be able to attract more customers. Therefore, these three neoclassical economic thoughts demonstrate that the free market can appropriately reconcile the self-interest of producers and consumers, so it would tend to towards equilibrium. According to Keynesian economic theory, Keynes points out that unemployment is a serious issue in the economy that is caused by imperfect information between producer and consumer. It implies that the producer may not sell out all the goods that they produce Chang, H-J. (2014). For instance, similarly, a great many of labors seek to find an occupation, but all the work-seekers may not be completely accepted by employers due to firm’s own preference and labour ‘s productive capacity. Moreover, Keynesian economic thought states that uncertainty also is a mainShow MoreRelatedKayne vs Hayek1370 Words   |  6 PagesChanya Udomphorn ID# 5380040 Macroeconomics Mr. Rattakarn Komonrat Keynes vs. Hayek Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. They develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflationRead MoreMarshall Vs. Thorsten Veblen Theories Of Behavioral Economics945 Words   |  4 Pages Economic Theories Name Institution Question A. 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