New Classical Approach In A Recession.

Running head : NEW CLASSICAL APPROACH IN A RECESSIONNameInstitutionA recession refers to a slowdown in the saving that depresses the train of financial activities that take place on a daily basis . Most people ordain be heard to complain that there is no funds in the economy To get the economy up and running once again , the level of economic activity ask to be change magnitude . For the new Greco-Roman model the problem of economics lies in the three issues of rational preferences , perfect knowledge of the market and the article of belief of utility whereby individuals maximise and finally that firms operate mainly to maximize profitIn a recession , consumer demand is low and thus business levels are also low . New classical theorists give look for measures to increase the level of economic activity by intervening in the market to create demand which will in release spur production to meet the needs of the consumers (Stein , 1982 . The one way of doing this is by raising the disposal income getable to individuals . This can be done by reducing the level of taxation or giving tax breaks to people buy their first home Other measures include reducing the national Reserve base rate . This will in turn have a knock-on effect on the economy with banks and different financial institutions lowering their lending rates . Increasing the minimum wage will be able to produce the aforementioned(prenominal) effect .

As consumers find themselves with more money in their pockets , they will go out and spend the excess on goods and services that they need and wantComparing this model with other ones , the new classical model is able to address the issues surrounding the economy without cause inflationary pressures as would the other models . Increasing the supply of money in the economy or embarking on social groundwork projects so as to create employment tend to be expensive and temporal measures that do not fully annunciation the causes of a recession (Stein , 1982 Consequently , this model with its non inflationary measures and immense term aspect as a fiscal interjection is better than all other optionsReferencesStein , J . L (1982 . Monetarist , Keynesian New classical economics Oxford : BlackwellNEW CLASSICAL APPROACH IN A RECESSION PAGE MERGEFORMAT 3...If you want to get a full essay, order it on our website: Ordercustompaper.com

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