ISLM model Essay Example | Topics and Well Written Essays - 1000 words

ISLM model - Essay Example money demand equals to money supply. In the IS-LM model, money demand is assumed to be given exogenously at any point of time. It is the Central Bank, which determines money supply in any economy at any given point of time. The intersection of the two curves is known to be as the point of general equilibrium at which both the money market and the goods market are in equilibrium. In the above figure, the positively sloped curve is the LM curve, while the negatively sloped curve is the IS curve. E* is the intersection point of the two curves and represents general equilibrium. r* and y* is the general equilibrium values of r and y at which goods and money markets are simultaneously in equilibrium. Whether an economic model is reliable in terms of the values of different variables that it predicts and/or whether an economic model is capable enough of capturing what is actually happening in the real world depends on the reasonability of the assumptions it is based on. To examine how well IS-LM model captures what actually happens in the economy, one needs to check whether the two basic assumptions of the IS-LM model are reasonable. The major problem with the IS-LM model is that its two basic assumptions mentioned above have certain limitations and for this reason in spite of being a fundamental macroeconomic model, economists not very frequently use it for estimating the parameters involved in this model as well as the future values of output. (Clarida and Gertler, 1999 First, consider the problem with the assumption of price rigidity. IS-LM model always makes a prediction that equilibrium can be obtained at any level a it considers a passive kind of supply. According to this model, producers produce whatever is demanded by the buyers. In IS-Lm framework, if in an economy demand changes, then the economy will make all the adjustments to that change in demand in

David Thoreau and the Doctrine of Disobedience Essay

David Thoreau and the Doctrine of Disobedience - Essay Example The paper tells that the questions that emerged from Thoreau’s famous night in jail resulted in an essay originally entitled â€Å"Resistance to Civil Government,† which probably more accurately describes his position and the course of action he adopted in response to what he considered the depredations of the U.S. government. Thoreau expressly refused to pay taxes to the state of Massachusetts as a form of resistance to the federal government’s tacit support of slavery and its expansionist war against Mexico. However, it is generally forgotten that Thoreau specifically consented to the right of Massachusetts to assess and collect taxes, provided that those monies were to be used for just and moral ends. In his article â€Å"Thoreau: A Civil Disobedient?,† W.A. Herr contends that the term â€Å"civil disobedience† has been used to describe a broad range of socio-political activities, ranging from revolutions to hunger strikes, an expansive perspecti ve on what was for Thoreau a simple matter of refusing to comply with immoral government policies. As the concept exists today, civil disobedience evokes images of widespread, organized initiatives aimed at forcing profound political change. Herr notes that there is no available evidence that Thoreau ever actually used the term â€Å"civil disobedience†, at least not in his writings. In his famous essay, Thoreau ponders a matter of individual conscience; he is not a â€Å"call to arms,† nor is it a manifesto, as some have claimed. ... Published in 1849, â€Å"Civil Disobedience† is Thoreau’s reaction to an America that he believed had failed to live up to the constitutional promise of equality and justice. The burden of labor in the South was shouldered by enslaved human beings; in the North, wealthy industrialists and factory owners held exploited workers in a state of thralldom that approximated slavery. America was brutally enforcing the doctrine of ma nifest destiny in the West while using its military power to wrest vast territories from Mexico. Thoreau wrote that this ran counter to the true business of government, which is to uphold civil rights, to protect the populace and provide opportunities for people to live the good life. Citizens of conscience should counter the policies of governments, which do more harm than good. His key point is that the individual is every bit as justified to act as a government, that the only true obligation of the citizen is to follow the dictates of his conscience. Thoreau could not countenance obeying a government that supported the institution of slavery. As such, the government could have â€Å"no pure right over my person and property but what I concede to it†. The evolution of government to a more enlightened version, such as democracy, is profoundly a matter of preserving individual rights, he argues. As such, the citizen is compelled to exercise one’s rights by refusing to support the betrayal of the natural contract between the individual and government. Much of what one reads in â€Å"Civil Disobedience† sounds quite familiar, particularly to a native American.