October 16, 2019

MACROECONOMIC THOUGHTS.PART 12

applicable to today's mounting economic challenges.They showed otherwise that keynesian model largely misrepresented by their relationship the nature of saving,investment and economic growth.While the fiscal multiplier was recognised by the keynesian school,the money multiplier that deals with money self replication process,roots is monetarist.Both are dominant broad multipliers in macroecomicmanagement,the latter results from a system of fractional reserve banking.keynesians argued economies do not stabilise themselves too quickly unless there is governmental massive intervention to grow shortterm demand.The same with wages and employment,and prices barely respond too quickly until the monetary policy intervention is leveraged or applied.Consequently,slowdown change in terms of growth in short term demand and boost employment.There is no doubt the pioneering influence of keynesian economics that towered extremely like a colosus over the spectre of macroeconomic scholarship could not be whisked awayin a jiffy

October 13, 2019

MACROECONOMIC THOUGHTS.PART 11

instrument speaks volume of this theory of fiscal stimulus.It says every injection of government spending will lead to more business activity and much more spending.The theory proposes spending by nature boosts agregate output and skyrockets income generation.That workers extraincome would balloon gross domestic product beyond its initial stimulus proportion.The marginal propensity to consume is a function of the magnitude of keynesian multiplier as one workers spending spiral income for the next worker and the cyclical tradition of the worker's income being perpetually spent refers to the multiplier.keynesians say individuals should spend less and spend more,growing marginal propensity to consume,generate full employment and ensure economic growth.The demand side model dominated academic circles for decades unchallenged until the emergence of new generation of neoliberal economists such Milton Friendman and Murray Rothbard challenged him.The famous 1936 book that responded to time exigency then would not be