Answer to Question #217508 in Economics for Adekunle

Question

1. Landreth and Colander divided the description of institutionalists into three

(a) Discuss these divisions

(b) What are the major Contributions of the public choice theorists to economic analysis 

2.(a) Distinguish clearly the differences between partial and general equilibrium with vivid example. 

2.(b) Discuss the various measures prescribed by John Maynard Keynes to correct the economy during recession and depression. 

Answer 1

1. (a) Landreth and Colander divided the description of institutionalists into three: 

• Traditional institutionalist economists – the followers of Veblen, Mitchell and Commons. One prominent follower of the Veblen-Mitchell-Common views is Clarence E. Ayres.
• Quasi-institutionalists- writers whose ideas resemble those of the institutionalists but who are too individualistic to fit the traditional institutionalist sphere. Example of writers in this group include Joseph Schumpeter, Gunnar Myrdal and John Kenneth Galbrath.
• Neoinstitutionalists – economists who write in a neoclassical choice-theoretic tradition but who believe that institutions must be far better integrated into current practice than is currently done.

(b) Understanding public choice allows actors in the legal and political systems to better understand policy tradeoffs and implications. ' With this knowledge, such actors can make decisions more likely to maximize social welfare.

2. (a) In a partial equilibrium model, you are ignoring feedback that may result from related markets. General equilibrium models differ from partial equilibrium models in that they incorporate related markets or economic sectors into the analysis.

(b) Keynesian economics argues that demand drives supply and that healthy economies spend or invest more than they save. Among other beliefs, Keynes held that governments should increase spending and lower taxes when faced with a recession, in order to create jobs and boost consumer buying power.