REFLECTION PAPER

GROUP 3 PRESENTATION
ECONOMIC DEVELOPMENT

Two opposing economic theories that offer various viewpoints on how to create economic
stability are the self-regulating economy and Keynesian macroeconomics. I shall express my
opinions on Keynesian macroeconomics, economic instability, and the self-regulating economy
in my reflection paper.
Keynesian macroeconomics places a strong emphasis on the necessity of government
involvement in order to maintain economic stability in unstable times. According to this view,
the government can use monetary and fiscal policy to boost the overall economy and reach full
employment. This theory's emphasis on lowering economic volatility, especially during times of
crisis, is one of its main advantages.
Keynesian macroeconomics is not without its detractors, though. Its potential to cause inflation
and a growth in government debt is one of the primary critiques. Here is due to the possibility
that higher government expenditure may result in higher prices, which will then reduce
consumers' purchasing power. In addition, rising government debt may arise from greater
expenditure, which would be detrimental to the economy in the long run.
The self-regulating economy, on the other hand, postulates that the market will eventually
stabilize itself automatically. It makes the supposition that markets will operate effectively and
that no need for government intervention exists. This theory frequently relates to traditional
economics and stands in stark contrast to Keynesian macroeconomics.
The self-regulating economy, however, has under criticism in recent years for a number of
factors. One of the main criticisms is that it makes the assumption that markets would always run
smoothly. Market failures can happen, albeit this is not always the case. As a result, there may be
economic instability and ineffective resource allocation.
The self-regulating economy may also result in income disparity. The market might not allocate
resources in a way that benefits everyone without government involvement. This may cause
some people and groups to fall behind while others advance. In addition, a lack of government
involvement may prevent the economy from progressing and innovating.
Overall, to develop a comprehensive understanding of economic theory, it is crucial to
comprehend both Keynesian macroeconomics and the self-regulating economy. Even if each
theory has its advantages and disadvantages, using both can result in a more successful economic
strategy that promotes stability and advancement.