2. Theoretical perspetive

Question 1

Keynesianism: Core Principles

Answer 1

• Advocates government intervention during recessions to stabilize the economy.
• Happens through fiscal and monetary policies to stabilize the economy and promote full employment
• No wage cuts, as that leads to less demand

Question 2

Liberalism: Core principles

Answer 2

A political and economic ideology that emphasizes
- Free markets,
- Limited government intervention
- Individual freedoms

Question 3

What is meant by free-market approach?

Answer 3

Minimal state intervention

Question 4

Neo-Keynesians what focus is there?

Answer 4

Builds on traditional Keynesian ideas while incorporating elements of neoclassical economics

Question 5

Post-Keynesians and which country has this focus?

Answer 5

• A new branch that critiques both neoclassical economics and neo-Keynesianism
• Instead focuses on more income distribution, financial stability and more demand. To create growth.
• France uses this

Question 6

What is Neo-classical theory?

Answer 6

Markets are efficient and self-correcting. Supply and demand determine prices and wages. Minimal government intervention is best for growth

Question 7

What is Neoliberalism?

Answer 7

Promotes free markets, deregulation, privatization, and reduced government spending.
- Wants more productions

Question 8

What is financialization?

Answer 8

Shifts the focus from production and real economic activities to financial activities and profits.

Question 9

What is profit-led growth?

Answer 9

It is driven by increases in profits rather than wages. In this scenario, higher profits encourage businesses to invest more, leading to increased production, employment, and overall economic expansion

Question 10

What is the Schumpeterian approach?

Answer 10

Focus on Innovation and Technology and says that growth Is driven by technological progress and innovation.
- Innovations are key to new markets and industries

Question 11

Schumpeter vs. Post-Keynesian. What does each say about demand?

Answer 11

PK = Investment driven by market demand and profitability.
Schumpeter = Innovation creates demand rather than just responding to it.

Question 12

Which of these two is neoliberalist or Keynesiasm approaches are more risky.

Answer 12

it is Neoliberistic as that approach doesn’t “allow” government intervention, meaning that they can’t apply any polices.
Neoliberal = more production -> prices fall -> GDP rise
if fails = less production -> prices rise -> GDP fall -> No policies can be applied

Keynenaism = more demand -> prices rise -> GDP goes up
If fails = less demand -> prices fall -> GDP falls -> can apply polices to adjust for the falling GDP (Monetary policy)