A BIG HIKE IN GOVT EXPENDITURE IS IMPERATIVE FOR GENERATING JOBS FOR THE YOUTH
ADDITIONAL REVENUES FOR FINANCING CAN BE MOBILISED FROM WEALTH TAX MEASURES
2024-06-07 12:05
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A distinction is drawn in economics between demand-constrained systems and resource-constrained systems (which for simplicity and symmetry we shall call supply-constrained systems). In the former, an increase in output can occur if there is a rise in aggregate demand without causing any scarcity-induced inflation; in the latter, output is constrained either by capacity being fully used up, or by the scarcity of some critical input or of foodgrains or of the labour force, so that a rise in aggregate demand, instead of raising output, simply causes scarcity-induced inflation. Capitalism normally, that is, except in war times, is a demand-constrained system, while socialism that existed in the Soviet Union and in Eastern Europe was supply-constrained. In a demand-constrained system, employment too will rise if there is an increase in aggregate demand.