How an economist answers the question, does economic power exist, is one main di

Question

How an economist answers the question, does economic power exist, is one main difference between the heterodox and conventional approaches. Explain both positions by explaining their supposed general theories. (Note, this is asking you to explain, according to each theory, how the economy operates. You will also need to include the concept of scarcity or lack thereof to answer this correctly.) Which theory more accurately represents the real world? What data and evidence can be provided to support this? How can the government use its “power of the purse”, i.e., the creation of money, to correct for unequal economic power or is this even necessary at all? What policies could be taken to level out the economic playing field if economic power exists? Would this cause inflation? Why or why not?

Explanation / Answer

The most important economists known to us are classical economists are modern economists like keynes

Classical economics has idea of free market and it clearly feels market forces are the most important factors in economy and Demand and supply model is shown clearly here, Adam smith and david ricardo was behind this

Keynes came later after great depression and he believes that when economy is in recession government must intervene as normal forces of market are not enough to change the situation. Keynes however does not disagree with classical economists, He just stated exceptions

Keynes theory reflects the present world.

the best evidance is the bail out packages that are issued by most of the governments in the world after 2008 global financial crisis

Creation of money is very dangerous business, Inflation could just destroy both fiat currency and economy at once, This happened once in germany and much recently in zimbwabwe, Reckless printing is useless.

It is very difficullt to level out economic playing field, Some countries or markets have some advantages like cost etc that just cannot be ignored. If you try to compete in such disadvantage area using money it would exhaust all your money and also cause inflation.

Competing with China for manufacturing is best example.

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