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Explain Why There Was a Widespread Adoption of Neoclassical and Neoliberal

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Essay

Explain why there was a widespread adoption of neoclassical and neoliberal policies across the global economy from the mid 1970s onwards. What are seen as the main weaknesses of this approach to economic policy?


Definitions:

Corporate Tax Rate

Corporate tax rate is the percentage of a corporation's profits that is paid to the government as tax.

Debt Ratio

The portion of assets financed by debt, showing the extent to which a company relies on borrowed funds for its operations.

MM Model

Refers to the Modigliani-Miller theorem, a foundational concept in corporate finance that states that under certain market conditions, the value of a firm is unaffected by how it is financed.

Arbitrage

The simultaneous buying and selling of the same commodity or security in two different markets at different prices, thus pocketing a risk-free return.

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