Solow-Swan growth model Essay Example | Topics and Well Written Essays - 750 words

Solow-Swan growth model - Essay ExampleThe model begins with neoclassical ware swear out presented by equation Y/L = F (K/L. making y the subject of the equation y = f(k), and this is represented by the red worm. Therefore, sidetrack per worker translates to capital per worker. From the graph, n = population growth rate, y = output/income per, k = capital per worker, worker, s = saving rate, L = labor force, and = depreciation.The steady press out is at point A where the two graphs interact. At this point, the first equilibrium, the output per worker is ever constant. When the investment cannot combat population output per worker the curve falls from y2 to y0. When saving per worker is greater than depreciation plus the population growth, the cumulative capital increases leading to qualifying of the steady state from equilibrium A to B.The concept of Keynesian economics is based on the divine entity that can lead to over economic difficulties. The Keynesian economics model em phases on the incident that intervention put by the government to necessary economic stability and growth during economic hard times. In this economic model, the government has a alert role to smoothen the business cycle bumps. The model stresses on the significant measures the government should take on spending, hiking, tax breaking among other measures for the economic system to function best during the economic crisis. The main importance of Keynesian economics frugality is that it helps governments to survive severe economic depression (Frank and Bernanke 54).... In this economic model, the government has a vital role to smoothen the business cycle bumps. The model stresses on the significant measures the government should take on spending, hiking, tax breaking among other measures for the economy to function best during the economic crisis. The main importance of Keynesian economics economy is that it helps governments to survive severe economic depression (Frank and Bernan ke 54). According to Keynesian economics theory, the macroeconomic economy is significant than a market aggregate. Moreover, resource markets and individual commodities can easily lead to automatic equilibrium that can last for a long time. However, it does not guarantee fell employment. Nonetheless, the Keynesian economics benefit government policies since it gives a helping hand to the economy. IS/LM chart illustrates an upward shift in the IS a curve that indicates an increase private investment or government spending thereby leading to interest rates (i) due to higher(prenominal) output (Y) Great Recession The Great Recession is the estimated as the longest regression of between 2007 and 2012. Therefore, it is sometimes called the 2007 global regression or the lesser depression. It is relate to the dominant global decline that started in December 2007 and registered a sharp down downward turn in 2008. The Great Recession affected the economy of the entire globe and some of the countries were hardly hit. The main characteristic of this recession was the systematic imbalance that led to global financial crisis between 2007 and 2012. Furthermore, it led to the European sovereign debt crisis. Regardless, of the European debt crisis, china and United States showed a continued economic growth thus, these two nations becoming global economic