Policies towards Achieving Macroeconomic Stability Term Paper

Policies towards Achieving Macroeconomic Stability - Term Paper Example John Maynard Keynes set a good underpinning for government economic decision that has since then be improved by the post-Keynesian economists, through both support and critic of Keynes ideas. It’s on the basis of these foundations that the government sets policies aimed at attaining long run macro-economic policies. Keynesians approach towards stability In establishing a long term s macroeconomic stability, it deems necessary to first understand what causes instability in the economy. Both monetarist and Keynesian economist agree that the world at times suffers from macroeconomic instability as shown by great recessions and booms. However the two economic thoughts differ on the cause and thus advocate for different approaches towards stability. Keynes study was based on aggregate demand and argued that the changes in the components of demand altered the equilibrium (Beetsma 2004). To the Keynesian economists aggregate demand is identical to output levels that can be measured i n terms of the Gross Domestic product (GDP). The components of demand are, consumption, investment, export surplus and government expenditure modeled as (GDP =C + I+ X + G= AD). Keynesian economics agreed that these demand components always fluctuate and thus the GDP can never be stable. This formed the main critic of self-adjusting mechanism as brought about the classical economists, with Keynesian economists arguing that investment was influenced by marginal efficiency of capital in addition to interest rates. Thus some savings are not invested as some individuals hoard cash balances if they speculate a rise in capital returns. Another cause of instability as observed by the Keynesian economists are fluctuations of the supply side, where output levels can be altered by artificial supply restrictions, wars, changes in cost of production all which reduce the output levels. All the alterations of the equilibrium call for correction measures, with which Keynesian economist suggest the opposite adjustment of either the government expenditure or consumption component. They thus advocate for discretionary fiscal policy where government expenditure is adjusted or alteration of taxes to reduce or increase overall consumption levels. The Keynesian economists argue that money velocity is unstable and unpredictable in nature and thus disregard monetary policies effectiveness in adjusting in equalizing aggregate demand changes. Moreover, due to frequently changing components of demand; Keynesian economists contempt annual budget adjustments and advocate for discretionary fiscal policies that instantly combat recessions and inflation despite causing surplus or deficit budget. In times of economic recession, when supply is more than demand hence causing reduction in commodity prices, demand has to be created. This is achieved by either reducing taxes or increasing government expenditure. Taxes are seen to reduce disposable income, readily available for consumption. A reduc tion in taxes increases disposable income and hence increases aggregate consumption. Government consumption on the other hand creates demand for the excess supply. In times of inflation the opposite is applied, that is increased taxes to reduce disposa

Demonstrative Communication Essay Example | Topics and Well Written Essays - 750 words - 4

Demonstrative Communication - Essay Example This research will begin with the definition of communication as a form of interaction through which individuals send and receive messages amongst themselves and there must be a sender and a receiver for it to take place. Over the past centuries, humans have come up with other ways to communicate through not only written text and spoken words but symbols, colors and body language among others. One form of communication is demonstrative communication, which mainly involves nonverbal and unwritten communication such as tone of voice, facial expression, and body language among others. Krueger posits that nonverbal communication is communicating without words but through various channels. Mostly, nonverbal communication is associated with body language, but the truth is, it also involves facial movements and vocal feature. In most cases, individuals tend to communicate non-verbally through body language and facial expressions. For instance, some people perceive yawning or stretching arms as a sign of tiredness. Demonstrative communication involves non-verbal and unwritten communications and facial expressions are the most popular among all forms of nonverbal communication. Facial expressions and body movements enable individuals to successfully communicate with those around them. Sometimes, demonstrative communication reinforces verbal communication in that, dressing appropriately tells a lot about the speaker especially during a presentation.