The Fall and Rise of Keynesian Economics

By John Eatwell; Murray Milgate | Go to book overview

8
The Imperfectionists

The key issues in any consideration of the operation of the market mechanism can be revealed by the answers given to two questions. The first question is whether the determination of relative prices in a market economy involves determination of the size and composition of output and, in particular, whether the level of output is such that labor is fully employed (in the sense that, at the going wage, all workers willing to offer labor would be able to find employment). The second question is whether variations in relative prices are associated with variations in output, such that the economy tends toward a level of output compatible with the full employment of labor. Each of these questions can be supplemented with a further question: if not, why not?

The significance of these questions can be illustrated in terms of the most elementary piece of orthodox neoclassical analysis. This analysis involves the argument that the price of a commodity is determined by the relationship between demand and supply. According to this account, equilibrium, determined at the intersection of a function relating price to quantity demanded and another function relating price to quantity supplied, is defined as “market clearing,” When this view of price determination is extended to the economic system as a whole, the equilibrium position of the economy is characterized by a set of market-clearing prices, with associated quantities (levels of commodity output and levels of factor utilization) such that the markets for all commodities and all factors of production clear. In particular, the labor market clears at the

-155-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited page

Bookmark this page
The Fall and Rise of Keynesian Economics
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this book
  • Bookmarks
  • Highlights & Notes
  • Citations
/ 423

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.