Diff Btwn Classical-Keynesian

8/13/2019 Diff Btwn Classical-Keynesian

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Differences Between Classical & Keynesian

Economics

by Osmond Vitez, Demand Media

Economics is the quantitative and qualitative study on the allocation, distribution and productionof economic resources. Economics often studies the monetary policy of a government and otherinformation using mathematical or statistical calculations. Qualitative analysis is made by

making judgments and inferences from fiscal information. Two economic schools of thought are

classical and Keynesian. Each school takes a different approach to the economic study ofmonetary policy, consumer behavior and government spending. A few basic distinctions separate

these two schools.

Basic Theory

Classical economic theory is rooted in the concept of a laissez-faire economic market. A laissez-

faire--also known as free--market requires little to no government intervention. It also allowsindividuals to act according to their own self interest regarding economic decisions. This ensures

economic resources are allocated according to the desires of individuals and businesses in the

marketplace. Classical economics uses the value theory to determine prices in the economic

market. An items value is determined based on production output, technology andwages paid to produce the item.

Keynesian economic theory relies on spending and aggregate demand to define the economicmarketplace. Keynesian economists believe the aggregate demand is often influenced by public

and private decisions. Public decisions represent government agencies and municipalities.Private decisions include individuals and businesses in the economic marketplace. Keynesianeconomic theory relies heavily on the fact that a nations monetary policy can affect

a companys economy.

Government Spending

Government spending is not a major force in a classical economic theory. Classical economists

believe that consumer spending and business investment represents the more important parts of anations economic growth. Too much government spending takes away valuable

economic resources needed by individuals and businesses. To classical economists, governmentspending and involvement can retard a nations economic growth by increasing the

public sector and decreasing the private sector.

Keynesian economics relies on government spending to jumpstart a nationseconomic growth during sluggish economic downturns. Similar to classical economists,

Keynesians believe the nations economy is made up of consumer spending,

business investment and government spending. However, Keynesian theory dictates that


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Differences Between Investment Officers &

Investment Managers

by Forest Time, Demand Media

While the terms "investment manager" and "investment officer" are sometimes usedinterchangeably, they are more properly used to describe different persons and entities in theworld of business and finance. Although both analyze and make decisions about the investments

of others, there are several differences between investment officers and investment managers.

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Individuals vs. Entities

While the term "investment manager" can refer to an individual, the United States Securities and

Exchange Commission reports that the term is also used to describe a wide array of entities,

including "investment advisers, banks, insurance companies, broker-dealers, pension funds, andcorporations." In contrast, the term "investment officer" is only used to describe individuals.

Independent vs. In-House

In general, the term investment manager refers to an individual or an entity for hire. Individualsor businesses can hire independent investment managers to oversee investment portfolios, and

investment managers typically oversee the investments of several clients simultaneously. Aninvestment officer, on the other hand, is hired by a company as an employee to provide in-house

investment oversight for that company only.

Classification

Investment manager is a general term that refers to an individual or business that provides

investment oversight for other individuals or businesses. On the other hand, the term investmentofficer can be used to refer to specific levels of achievement in the financial world. For example,

the California Public Employees' Retirement System distinguishes between investment officersat levels I, II and III. Another related term is "Chief Investment Officer" or CIO, which refers tothe head of an investment team at a firm or business.

Prestige
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While independent investment managers might be locally known, acknowledged and respected

for their achievements, the prestige accorded to investment managers cannot compare to the

prestige attached to prominent investment officers. This is especially true of those who haverisen to the lofty position of Chief Investment Officer for a company. Chief Investment Officers

are selected from the most capable and respected financial experts in the world.

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Diff Btwn Classical-Keynesian