Essay about General Theory of Employment - 1708 Words

An analysis of Keynesian economic approach in Indian context The relevance of Keynes in Indian context is been questioned as well as a matter of discussion among various economists arenas and conferences from post independence to licence raj to neo-liberal shift. in the economic structure. According to the General Theory of Employment , Interest and Money has trivial relevance in underdeveloped countries like Indian context.According to the Keynes he posses his argument on based of his understanding that these economies do not suffer with involuntary unemployment. These economies do have the state of full Employment. According to Keynes these economies do not have a long term economic development plan which he termed as the major†¦show more content†¦So Keynesian Economics drives certain postulates: Wages are decided by the bargaining in the market in money terms. Wage money is fixed by the bargaining between employer and the Trade Unions. These wage rate are based on consumption, investment, price etc are measured in terms of wage units. Price of wage goods is determined by the capital expenditure, consumption and investment. There is very less propensity for a labor to save and there is very less propensity for a employer to consume in the scale of is of its investment. Aggregate demand price and aggregate supply sets up an equilibrium. This decided by the expenditure on consumption and the expenditure on Investment. At the level of equilibrium Involuntary Unemployment emerges when the real wage may be too high to provide Full employment. Which is a caused by the equilibrium between aggregate demand price and aggregate supply price. This lead to cut in the price of the wages. This would have direct effect on the money wage paid to the labor . Hence marginal dis-utility of labor may increase over marginal utility of the labor. A labor may not wiling to accept the work or an employer may increase the number of labor required for the same job. This can be controlled by maintaining low rate of interest and by increasing the propensity to consume. Keynes in this way critiqued the postulates given by the classicalShow MoreRelatedThe General Theory Of Employment, Interest, And Money1332 Words   |  6 PagesIn the renowned work, The General Theory of Empl oyment, Interest, and Money John Maynard Keynes breaks down his general theory of mercantilism and free trade into seven different section. Each section talking about his opposition to economic theorists and his views on the advantage of having an adaptable and well prepared system to maintain an efficient economy. In his first argument he starts off by explaining how  Ã¢â‚¬Å"for the past one hundred years there has been a remarkable divergence of opinion†Read MoreThe General Theory Of Employment, Interest, And Money.1653 Words   |  7 PagesThe General Theory of Employment, Interest, and Money Background information about the Author John Maynard Keynes was born in Cambridge, England in 1883 (Bateman, Toshiaki, Maria, 2010). He was the first born in a family of three children. He spent most of his toddler years in Cambridge where he attended kindergarten. In 1889, he attended his first kindergarten lessons at Perse School for Girls where he was supposed to attend lessons for five days a week. At the initial stage of education, he showedRead MoreGeneral Theory Of Employment, Interest And Money2303 Words   |  10 Pagesmicroeconomics and macroeconomic. Compared to microeconomics, macroeconomics is a wider branch of economics. 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The 1930s gave rise to Keynes’ ideas, especially after the publication of his revolutionary book The General Theory of Employment, Interest, and Money in 1936. â€Å"Keynesian economics dominated economic theory andRead MoreNeoclassical Theory Of Keynesian Theory1578 Words   |  7 Pagesboth the Neoclassical school of economic thought and Keynes’ General Theory. The UK Cambridge Post Keynesian view of economics also contains elements from both these schools, yet the Neoclassical Keynesian synthesis and the UK Cambridge Keynesian bodies of economic tho ught differ in their views, methods and ideas. The two schools utilise different models to reach the similar conclusion that the economy will tend towards full employment equilibrium in a long run situation – a conclusion that complementsRead MoreKeynes Macroeconomic Theory Essay1181 Words   |  5 PagesAfter 100 years of the industrialization era modern economics began to see a change and shift of ideas. These ideas were brought to the front by John Maynard Keynes, who in 1936 transformed much of the modern economics by a single book The General Theory of Employment, Interest and Money. Keynes also wrote other titles as well as ‘A Tract on Monetary Reform (1923) which was an attempt to secure a monetary policy instead of the gold standard. Keynes (2002) believed that the stable economy of BritainRead MoreThe Keynesian Era During The Middle Of The Nineteenth Century1720 Words   |  7 Pagesnineteenth century, economists Adam Smith, David Ricardo, Thomas Mathus, and John Stuart Mill all shared somewhat similar economic views of the world. Some of the main concepts covered during this time included the division of labor, theories of rent, value, and distribution, theories of market â€Å"gluts† and population, and opportunity cost, competition, and trade. These classical economists believed capitalism was the foundation for an efficient economy where little to no government intervention was recognizedRead MoreJohn Maynard Keynes Transformed Economics In The 20Th Century1507 Words   |  7 Pagesthe postulates that underpinned their theories. Keynes disagreed with the laissez faire attitude of the classical thinkers, and argued for greater government intervention due to his belief that the focus should be on dema nd side macroeconomics rather than supply side. This belief transpired because of the Wall Street Crash of 1929 and the subsequent depression that highlighted the shortcomings of the traditional theories, especially in regards to employment that remained excessively high for a prolongedRead MoreHow the Economy Works712 Words   |  3 PagesQuantity Theory of Money is an economic theory that states that the money supply is an economy is directly proportional to the general price level. This theory is commonly associated with neoclassical economics. Milton Friedman, a famous economist, modified this quantity theory of money by formulating a theory called the general theory of asset demand, where money demand is a function of wealth and returns of other assets relative to money. The Keynesian school also came up with a different theory ofRead MoreJohn Maynard Keynes : The Father Of Macroeconomics1502 Words   |  7 Pageseconomist, whose impact on economic theories has proven substa ntial contribution to reconstructing of economical values. He had influential individuals who helped intrigue and develop his interests in economic. Keynes interests were beyond economics; he took active stance on proposing post-war monetary funds, important for Germany’s reparation and reconstruction funds after World War II. Through his different opportunities and bureaucracy, Keynes developed theories, for which he believed is vital to