Equilibrium Level Of National Income In The Keynesian Cross Model Economics Essay

Equilibrium Level Of National Income In The Keynesian Cross Model Economics Essay National income is defined as the investments and savings in a countrys economy. Keynesian cross model shows the formula for equilibrium national income as; Y= C +I+ G+ (X-M); where Y is the national income, C is aggregate consumption, I is aggregate investment, G is government spending, X is exports and M is imports. The aggregate demand is an upward curve since it is assumed consumers demand more when their disposable income is high. There is a positive relationship between disposable income and consumption and therefore it is true to argue that demand will always increase with increase in disposable income. Aggregate demand also increases as investment increases but is negatively affected if it happens that imports and taxes increase due to rise in investment since they negatively affect the investment level. The equilibrium level is at the point where AD, total demand, is equal to Y, national output. At this point, total supply equals total demand. The major factor leading to a movement towards the equilibrium points is inventory changes as a result of changes in income and production- if it happens that the current output is more than the equilibrium level, inventories will accumulate leading to a cut down in production and thus a downward move towards the equilibrium. On the other hand, with a production level below the equilibrium, there is short of inventories and thus businesses will produce more leading to an upward move towards the equilibrium. If there is a rise in any of the aggregate demand components, C, Ip, G or NX, the demand curve shifts upward. The rises in these components can be as a result of increases in production because of increased optimism about the profitability in the future. This increase will lead to an increase in the equilibrium levels. Similarly, with a decrease in any of the demand components, the demand curve shifts downwards and leads to a decrease in the equilibrium levels. Keynes effect assumes that quantity demanded increases with decrease in price and vice versa. With constant nominal money supply, decreasing price implies lower interest rates and thus higher spending. The major emphasis in this model is that a decrease in aggregate demand can lead to a stable equilibrium with substantial unemployment. Full employment is argued to be arrived at when there are adjustments in the aggregate demand. The equilibrium national income (Y) is as shown in the figure below. At Y, the desired spending curve intersects the total income curve; AD=Y. Aggregate demand AD National income Y Y Keynesian cross model has a number of limitations. The first one is the fact that not all of gross private domestic investment counts as part of aggregate demand (Dolan Lindsey, 1994, p.139). This means that the aggregate demand is undervalued since some investments, which need increase aggregate demand is left out. It is assumed that most of the investment is as a result of general over-production or unplanned inventory accumulation and thus there is always a decrease in national income whenever there is unplanned inventory accumulation. This implies that only the planned investment is included in the aggregate demand. Another limitation is that unlike all other demand curves, which are downward sloping, the aggregate demand curve in this case is upward sloping since it is assumed that an increase in national income or output will lead to increased disposable income and thus increased demand. The last limitation is the fact that the national output curve needs to be steeper than the aggregate demand curve for the two to intersect. This implies that it is assumed that the aggregate demand curve has a positive vertical intercept so as to cross Y curve. In Keynesian cross theory, it is assumed that an economy does not necessary need to have full employment for it to be stable. As it is advocated in classical theories that there should be full employment in the economy to prevent recessions and inflation, Keynes argues that an economy can be stable only when there is adjustment in the aggregate demand. This way, equilibrium aggregate income does not necessary mean full employment. J. M. Keynes supports this argument by stating that, Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spiritsof a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilitiesif the animal spirits are dimmed and the spontaneous optimism falters enterprise will fade and die (Heijdra, 2009, p.25). It should be noted that although Keynesian cross model is simple and easy to understand, its limitations make it unreliable. Its demand curve contradicts with all the other theories.

Covingtons Conviction of Serpent Handling Essay -- Biography

In Salvation on Sand Mountain, the emotional frustrations, cultural hypotheses, and literary images provide insight into the ethics of the author, Dennis Covington. During his dangerous undertakings while submerged in the religious practices of Appalachia, Covington incites anxiety within the reader when discussing worship services involving snakes, and inquisitorial thought when revealing the number of casualties involved, in turn showcasing his own passions and morality. Covington’s rectitude, goodwill, and intelligence all play important roles in revealing his ethos. Subsequently, they also exemplify his argument: No obstacle can conquer one’s religious devotion. Covington’s intellect boasts a curious ambition to solve the secrets of the Appalachia through factual data and personal inquiries. â€Å"Their first church in town burned to the ground† Covington explains, â€Å"They suspected arson, but charges were never brought†¦they moved to other locations†¦neighbors complained of the noise. Wherever the handlers relocated, tires got slashed and windows broken† (25). By presenting facts about the trouble the snake-handlers dealt with, Covington reveals how steadfast they are in their religious faith. The serpent-handlers’ strong devotion has turned into a tainted reputation for some, such as Glenn Summerford. Curious to hear Glenn’s version of why he was put in jail for ninety-nine years, Covington interviews him. When asked about his wife, Darlene, Summerford simply states that when she was â€Å"living right, she drank [poison]† (50). Faced with a lifetime sentence in a jail cell, Summerford shows no remorse, and instead criticizes his wife, whom he attempted to murder, for not living by the word of God. Glenn Summerford’s testimonial is a ... ... person, yet theirs remain unconquered. As we analyze Covington’s rhetoric, we can see the manifestation of an ethos that follows a strong ethic code, a powerful intellectual prowess, and a devoted righteousness towards the confusing, yet strong-willed worshipers of serpent handling. As Covington explains it, â€Å"There are moments when you stand on the brink of a new experience and understand that you have no choice about it. Either you walk into the experience or you turn away from it, but you know that no matter what you choose†¦there will be consequences† (2). For the followers of serpent handling, these experiences are always pursued. These consequences, such as broken windows, burning churches, murder allegations, or desperate pursuits of the Holy Ghost, all have laid the foundation for Covington’s argument, that no obstacle can conquer one’s religious devotion.

Significant Events That Led To Prussia’s Expansion

The rise of Prussia started with one man, Frederick William. Fredrick was the first major ruler of Prussia. Fredrick was important to the rise of Prussia because he was able to get a large standing army. To sustain a large army Fredrick had to tax his people. Having a large army was the key to Prussia’s expansion. During the Spanish war, he offered his army to the Holly Roman Empire and by doing so gave him the title of King of Prussia. Fredrick wanted Prussia to be a great power in Europe. To reach this goal he introduced a cabinet system of government. By doing this he could take full control of Prussia. He also enforced a General Directory, which united all areas of the Prussian empire. Due to Frederick’s rule the Prussian army was able to double within forty years. This meant that Prussia had the third largest army in Europe. When they only had the thirteenth largest population. Frederick used Prussia’s large army as a symbol of power and not to be used for dominance but his son Frederick the second had other ideas. Fredrick the second took advantage of the Prussian army. During his reign Fredrick the second attacked Austria and conquered Silesia during the Silesian war. Frederick II was able to claim polish territories to connect the empire. During his military campaigns he gained the title of Frederick the great. Frederick the great was also able to transform Prussia into an economically powerful state. After the conquering of Silesia Frederick was able to gain raw materials to fuel the Prussian infrastructure. He also added 150,000 acres of farmland, introduced new vegetables to harvest and introduced an indirect tax, meaning that the state would provide more revenue by this than it did with direct tax. Otto von Bismarck and the unification of Germany Otto von Bismarck was a skilled diplomat and was the chancellor of Prussia/Germany. Bismarck started many wars that led to Prussia’s dominance over Austria and France. Bismarck used both diplomacies and the Prussian military to achieve a unified Germany. Bismarck brought all the smaller states of Germany and combined them with Prussia, also making sure that Prussia was the most dominant state. Controlling both army and navy. In 1866 Bismarck had started a war with Austria that would cement Germany as one country. The Austro-Prussian war was a decider of who would have more German states. Due to Prussia having an alliance with Italy and better military tactician they were able to defeat Austria. This resulted in more German states under Prussian control over Austria. At the end of Bismarck reign he was able to say that he had connected Prussia with the northern German states creating one unified Germany.

Ethical Issues in Hrm in Organizations - 4398 Words

ETHICS IN HUMAN RESOURCE MANAGEMENT QUESTION Identify any ethical issues most likely to take place in the function of HRM in an organization Introduction The term ‘organizational justice’ refers to the extent to which employees perceive workplace procedures, interactions and outcomes to be fair in nature. These perceptions can influence attitudes and behavior for good or ill, in turn having a positive or negative impact on employee performance and the organization’s success. The concept of organizational justice extends traditional models of work behaviour that tend to conceptualize job demands, job control and social support as the main factors determining individual well-being and productivity. ‘Fairness’ is†¦show more content†¦For example, Greenberg (1994) found that smokers more strongly accepted a smoking ban at their workplace when they felt they had been given thorough information about the change of policy, in a socially sensitive manner (sec Internet Resources for more information on implementing a workplace smoking ban). The same principles might apply to the hypothetical promotion scenario given above. An unpromoted worker may be placated if he is convinced that the system used to decide promotions is transparent and free from bias. Voice principle People’s perceptions of procedural justice are likely to be enhanced if they are given the opportunity to present information and voice their concerns before decisions are taken. This can apply as much to general day-to-day working life and management practice as to formal, one-off procedures such as disciplinary hearings. Psychologists have argued that having a voice helps to fulfill particular needs such as the chance to be heard and to influence other people, as well as the confirmation of being valued as a participative group member (Storey, 2000). Simple activities, such as managers lunching with lower-level colleagues, operating open-door policies, or engaging in ‘walk-arounds’, can enhance the feeling among employees that they are being listened to. Other more direct initiatives promoting the voiceShow MoreRelatedEthical Issues Regarding The Human Resource Management947 Words   |  4 Pagesemployment relationship, some issues concerning ethics must be dealt with. The Human resource management section of any company is responsible for effectively and systematically managing people in the institution to achieve the desired goals. 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