Assignment #1

My understanding of neoclassical perspective as presented by the authors is that it mainly focuses on the supply and demand. It focuses on the prices, outputs and income. Equilibrium is set when the amount of food sold is equal to the amount of good produced, therefore making sure that prices are ranged with marginal costs. They tend to maximize utility and firms maximums profits. Neoclassical believe that pricing carbon through a tax will allow markets to increase the price of high-carbon energy will create space for others.

My understanding of neo-Keynesian perspective is that when there is a profit, it is because of economic growth. It is growing because of the demand that people want; increasing the government spending which then increases consumer’s demands. The main difference from Neoclassical and Neo-Keynesian is that one practice free market spending while the other focuses on government spending.

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