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Essay / Research Paper Abstract
This 5 page paper compares and contrasts these two schools of economic thought to identify their similarities and differences. The bibliography cites 3 sources.
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5 pages (~225 words per page)
File: TS14_TEnewcla.rtf
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freely with out any delay to clearing then the result would be a prosperous economy (Anonymous, 2002). In this the role of government in this case should be the facilitation
of the speedy clearing. This supply side economics can be seen as based on the theories of Free market, Says Law, and Quantity Money Theory. When we consider New Classical
Theory we see a development of this model of supply side economics. In the traditional classical model Free market theory said that any economy left to its on devices would
tend to move towards a point of full employment equilibrium (Anonymous, 2002). This would work by the unemployment n the society causing a surplus of supply over demand which would
then decrease the wages. As a result in the decrease in wages demand would once again increase for labour, therefore more jobs would be provided and the balance would be
restored (Anonymous, 2002). New Classical Economics there is a development from this more traditional stance, however there is a development where there is an emphasised role of rational expectations
and also looks to the natural rate of unemployment. This is seen as the unemployment level that exists in line with a stable inflation rate, and as such the position
of some unemployment in an economy is accepted, and the natural level is when the market is in equilibrium with no deficiency in the aggregate demand (this may be illustrated
by an illustration by the student). We may argue that the development of this theory was as a result of the arguments developed by the monetarist that were created by
the Keynesian school. The core idea of the new classical school my be seen as the policy ineffectiveness theory which states they believe that the economies can only be
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