Question

Briefly explain and contrast the Keynesian, Neoclassical, and Modern Growth theories of economic growth. What policies are suggested by each of the theories that might be successful in spurring growth in a metropolitan area?

Answer 1

KEYNESIAN THEORY --

=> The Keynesian economic theory is the theory of economics presented by the British economist John Maynard Keynes as his attempt to understand the situation of great depression in the country at that point of time . In this theory Keynes tried to explain the government to increase there expenditure and low down there taxes so the demand in the economy will increase and which will that out nation from the situation of great depression .

POLICY IN THIS THEORY - ( MONETARY AND FISCAL POLICY )

In the monetary policy it involves the changes in the interest rate which leads generation of money supply in the economy .

In the fiscal policy they involve changes in the government spending due to changes in the rate of taxation in the economy which leads changes in the aggregate demand in the economy .

with the changes in the monetary and fiscal policies as per the need for the nation the metropolitan areas will also get effected and get developed as per the actions by the government .

NEOCLASSICAL THEORY OF ECONOMIC GROWTH --

=> Neoclassical theory in the economics is the theory includes supply and demand of an individual rationally and the way to maximizing its level of satisfaction or utility and there profits as well .  

POLICY OF MAXIMUM UTILITY OF INDIVIDUAL AND FIRM -

In this they have specified that the total satisfaction and total utility of the individual is necessary as customer satisfaction is must with the maximum profit to the firm too as to run there business and supplying the products in the competitive market on time. It will help the metropolitan areas customer to get maximum utility and firm to get maximum profits and helps the area to grow together .

MODERN GROWTH THEORY OF ECONOMIC GROWTH -

The modern economic growth theory is the growth theory which involves the human needs and desires and the rise in the productive and the profits of the individuals . It shows that the real GDP per person will increase due to rise in the profit generation the individuals . It have its totally emphasis over the economic growth .

POLICY OF MANAGEMENT , URBANIZATION , FACILITATION .

In this they involves all the policies which are effective for the nations economic growth with the help of good management things and the growth will go in the right way and there will be efficient growth whereas , urbanization will help the nation to grow will best technology and skilled employees and better education system these all can be done with the help of facilitation with which the supply of every thing can be done in a proper way and this is successful for the growth in the metropolitan areas .