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Neoclassical economics, with its focus on individuals within systems, emphasizes the variable value of goods and services. Economics: New Classical Versus Neoclassical Frameworks: 9780631220022: Economics Books @ Amazon.com. In â¦ economics new classical versus neoclassical frameworks Oct 11, 2020 Posted By Edgar Rice Burroughs Public Library TEXT ID 15491823 Online PDF Ebook Epub Library 50 de 5 estrellas 1 calificacion ver todos los formatos y ediciones ocultar otros formatos y ediciones precio de amazon nuevo desde usado desde pasta â¦ which gets neo Keynesians as a response to that. All their analyses and predictions are based on this wide perspective on the economy as a whole system. It also relates to people’s ability to maximize utility and profit. This new synthesis is analogous to the neoclassical synthesis that combined neoclassical economics with Keynesian macroeconomics. Ecological economics, bioeconomics, ecolonomy, or eco-economics, is both a transdisciplinary and an interdisciplinary field of academic research addressing the interdependence and coevolution of human economies and natural ecosystems, both intertemporally and spatially. With a team of extremely dedicated and quality lecturers, classical vs neoclassical theory will not only be a place to share knowledge but also to help students get inspired to â¦ Marshall combined the cl… Classical economics was based on the principle of scarcity, as shown by the law of diminishing returns and the Malthusian doctrine of production, from the 1870s, neoclassical economists such as William Stanley in Great Britain, Leon Walras in France, and Karl Menger in Austria, shifted the economy, abandoned supply constraints to focus on the interpretation of consumer preferences in psychological … 4 – The Intervention of the State is necessary. All companies are able to enter that market, so it is impossible to set prices that are not available to consumers. Scientific Approach to Studies of â¦ Also false. L'economia classica è stata utilizzata nel XVIII e XIX secolo e l'economia neoclassica, che è stata sviluppata verso l'inizio del XX secolo, è â¦ In the post-war period, Samuelson was one of the first economists to popularise Keynesian theory with his amendments. Its advocates set out on an ambitious research program, entailing deriving the dynamic, aggregative behavior of the economy from the basic principles of rational, â¦ Neoclassical theory implies that consumers' preferences are invariant with respect to their current endowment or consumption. Structure of the Text and Different Ways to Use it. By treating the economy as a subsystem of Earth's â¦ Classical economics also developed in conflict with an earlier set of ideas called mercantilism(15th century to the early to mid-19th century) Mercantilist political policy aimed at increasing â¦ We need to reconstruct our economic understanding by studying neoclassical historical roots and by heeding the insights of the “Austrian” school of economics. Classical and neoclassical schools of criminology differ in theory and approaches to the justice system. Neoclassical economics dominated microeconomics and together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as Neo-Keynesian economics from the 1950s to the 1970s. Classical economics focuses on what makes an economy expand and contract. The term ‘neoclassical economics’ is imprecise and is used in different ways. Neoclassical economists believe that consumer has a perceived value of goods and services which is more than its input costs. 2 – The money can be used for various reasons, not just to buy consumer goods. Definition of Interest – According to the classical economists, interest is a … Skip to main content Hello, Sign in. 2. Neoclassical economics, on the other hand, grounds its analysis in mathematical models that are not grounded in history. Throughout history, there have been two competing perspectives about these questions, which we call Keynesian and Neoclassical economics. The classics took from Ricardo the concept of diminishing returns, which affirms that q increases labor force and capital q is used to tillage the land, decreases yields or, as Ricardo said, overcome some stage not very advanced, the process Of agriculture is gradually declining. The scope of economics science is greatly expanded when Smith emphasizes the role of consumption over production. 2. Thus, a new term appears: fiscal policy, which will be expansive when taxes are lowered, and transfers and / or expenditure increase; and will be contractive when taxes rise and expenditure and / or transfers decrease. Neoclassical economics is essentially utilitarian in its value theory with its use of marginal Neoclassical economics focuses on how individuals operate within an economy. It comes into play that if consumers do not buy, companies have too many products that they are not able to sell, therefore, they stop producing until they finish the stock of their stores. 2 – The Unemployment is voluntary. Although he accepted the theories of his classical predecessors, he relied more on educating the working class to limit its reproduction than did Ricardo and Malthus. (Keynesian economics is a justification for the ‘New Deal’ programmes of the 1930s.) Neoclassical economics assumes we move to an equilibrium. Neoclassical Economics vs. The term Neoclassical economics â¦ Back to the issue, Keynesian Economics VS Classical Economics: â¦ Managerial Economics Assignment Help, Neo classical vs keynesian school, Neo Classical vs Keynesian School We know that Keynesian economics was propounded as a revolution against the then prevailing orthodoxy of the classical school. It came about shortly after the creation of western capitalism. Classical vs. Neoclassical Conceptions of Competition Lefteris Tsoulfidis Department of Economics, University of Macedonia 156 Egnatia Street, P.O. Neo-classical economics has been the dominant force in economic thinking and policy-making for many years. There are several differences between new institutional economics and neoclassical theory. (Keynesian economics is a justification for the âNew Dealâ programmes of the 1930s.) The value and distribution theory of classical economics states that the value of a product or service depends on its cost of production. They are none other than the studies of classical economics, and the Keynesian economy, based on completely contrary principles. He argued that natural control was positive: the power of the population is so superior to the power of the earth to allow man’s subsistence that premature death must restrain human growth to some extent. I think chronological approach will be most clear in this case. Neoclassical economics, also referred to as mainstream or orthodox economics is undoubtedly the most prominent and dominant tradition of economic thought (Hodgson, 1992; Finlayson et al. Mill’s political economy principles were the center of this science until the late nineteenth century. Economia classica vs neoclassica. Preference and Utility Function. : 30 2310 891788, Email: Lnt@uom.gr Abstract This article discusses two major conceptions of competition, the classical and the neoclassical. "Classical" and "neoclassical" are the names for two philosophical approaches to economics. G.C. Also in the neoclassical school, economic equilibrium is a function of supply and demand across all markets, with the supply and dema… That is the primary difference between them and modern economics. Classical management theory treated organizations like machines and employees like parts in the engine. There is no equality between social classes, and those who want to find work cannot access it. The new neoclassical synthesis (NNS) or new synthesis is the fusion of the major, modern macroeconomic schools of thought, new classical and New-Keynesianism, into a consensus on the best way to explain short-run fluctuations in the economy. The three theories of interest, i.e., the classical capital theory, the neoclassical loanable funds theory and the Keynesian liquidity preference theory, have been differentiated below: Difference # Classical Theory: 1. Fiscal Policy. Because the classical school aims at explaining how economic systems grow and contract, economists from this school take a holistic view of such systems. Thus, when we have money, we use one part to consume, another to speculate (stock market, real estate market and another, for the sake of caution (we save in case something happens that we do not expect and, therefore, we need the money). Classical vs Neoclassical Economics Neo classical economics and classical economics are two very distinct schools of thought that define the economic concepts quite differently. The vast majority of all economists today work in the New neoclassical synthesis.This paradigm is essentially a combination of the best ideas from the New Keynesian and neoclassical trains of thought. The difference between these paradigms starts with the definition of â¦ Classical economics was based on the principle of scarcity, as shown by the law of diminishing returns and the Malthusian doctrine of production, from the 1870s, neoclassical economists such as William Stanley in Great Britain, Leon Walras in France, and Karl Menger in Austria, shifted the economy, abandoned supply constraints to focus on the interpretation of consumer preferences in psychological terms. 1 – The Market is perfect, there is free competition. Classical economics emerged in the 18th century. Selection and/ peer-review under responsibility of Academic World Research and Education Center doi: 10.1016/S2212-5671(15)00506-7 ScienceDirect 2nd GLOBAL CONFERENCE on BUSINESS, ECONOMICS, MANAGEMENT and TOURISM, 30-31 October 2014, Prague, Czech Republic Classical, Neoclassical and New Classical â¦ BBA & MBA Exam Study Online. Classical economics also developed in conflict with an earlier set of ideas called mercantilism(15th century to the early to mid-19th century) Mercantilist political policy aimed at increasing national power, symbolized by the might of the state. 7 – Qualities of an Auditor You Must Know, What is an Operational Audit? He was strongly against Marshall’s definition of human welfare and … [Read More...]. There are two studies, two schools of economics, which are fully applicable to these differences. Classical economics was founded by famous economist Adam Smith, and Keynesian economics was founded by economist John Maynard Keynes. To achieve this, they should not devote all their resources solely to earn more and … [Read More...], Adam Smith is termed as the father of modern economics. The views have had different names at different times, such as Classical and New Classical economics or Neo Keynesian and New Keynesian economics, but while these views have become more nuanced, the basic perspectives have remained the same. The new classical macroeconomics is a school of economic thought that originated in the early 1970s in the work of economists centered at the Universities of Chicago and Minnesotaâparticularly, Robert Lucas (recipient of the Nobel Prize in 1995), Thomas Sargent, Neil Wallace, and Edward Prescott (corecipient of the Nobel â¦ It formulates precise economic laws regarding production and consumption through the calculation of cost and benefit at the margin. The New Classical Economics took the first approach. Regardless of how old we are, we never stop learning. Classroom is the educational resource for people of all ages. Later management theories built on that neoclassical insight. Classical and neoclassical schools of criminology differ in theory and approaches to the justice system. It lay out many principles of economics that were then to be built on by the neo-classical school. The key difference between classical and neo classical theory is that the classical theory assumes that a worker’s satisfaction is based only on physical and economic needs, whereas the neoclassical theory considers not only physical and economic needs, but also the job satisfaction, and other social needs. Give Examples. classical vs neoclassical theory provides a comprehensive and comprehensive pathway for students to see progress after the end of each module. Paul Samuelson. Reference is again made to the fact that supply determines demand. With this, the production of goods and services is the prime focus of economic analysis. Anyone who wants to work will work, so unemployment is frictional or short-term. In competitive markets, consumer preferences for cheaper goods and producers’ preferences towards more expensive ones would be adjusted to reach a level of equilibrium, this balance would also be reached in the money and labor markets. By the influence of his work, it is generated what we know today as Keynesian economics. In addition, Mill was a reformer who wanted to forcefully record the inheritance, and even allow the government to assume its major role in protecting children and workers. Samuel Hamilton has been writing since 2002. CLASSICAL vs. NEOCLASSICAL ECONOMIC THOUGHT 527 in doing this, I believe, because my interest is not in the particularities or pur poses of the various analytic approaches which I bring under this umbrella, but in the assumptions they share on a particular type of economic rationality, ahistoricity and claim of value-free objectivity.7 This change can come from different causes (involuntary or voluntary) and can have … [Read More...], Any company that wishes to implement a Food Safety, Quality Management System, among others; it must go through periodic evaluation processes or internal … [Read More...], The path that companies have to travel to reach success is not easy. Economics: New Classical Versus Neoclassical Frameworks: 9780631220022: Economics Books @ Amazon.com The classical view, the predominant economic philosophy until the Great Depression, was that short-term fluctuations in economic activity would rather quickly, with flexible prices, adjust back to full employment. Which in turn leads to the neoclassical synthesis (I think?). 3 – The demand generates the supply. The new classical macroeconomics argues that business cycles occur essentially in a typical market clearing framework in response to real â¦ His work has appeared in “The Penn,” “The Antithesis,” “New Growth Arts Review" and “Deek” magazine. Preference and Utility Function. Discuss Cash Analysis in Business. Neoclassical economics, for many decades, has revolved around the choices that human beings make in a perfect world. This new synthesis is analogous to the neoclassical synthesis that combined neoclassical economics â¦ By Prof. Heinz D. Kurz Box 1591, Thessaloniki, Greece Tel. After which, we get new classical economics as a response (?) In a perfect world, humans will not make mistakes and will act as efficiently as… As the world evolves and tools to study human behaviour become more sophisticated, traditional economic models are becoming increasingly outmoded. Behavioral economists, however, object that there is evidence of âreference-dependenceâ â i.e., that â¦ In the classical school, equilibrium was a function of wages and interest wages rather than supply and demand. 2005). These principles are: 2 – The Money is only a means of transaction has no impact on the social economy. Further, neoclassical economics stipulates that a product or service often has value above and beyond its production costs. These goods and services are thought to be worth something regardless of who produces them and who uses them. He was the man behind all the basic laws of Modern Economics. Therefore, the success of each individual depends on their individual characteristics, not that it benefits their exceptional advantages or are victims of a special disability. Hamilton holds a Master of Arts in English education from the University of Pittsburgh, and a Master of Arts in composition from the University of Florida. Each had a distinctive approach to analyzing the economy. The new tools were instrumental in improving on the complexity of its mathematical approaches, boosting the development of neoclassical economics. The neoclassical approach recognized employees and managers as having individual goals separate from organizational goals. Account & Lists Account Returns & Orders. In time, however, the Keynesians themselves established orthodoxy. Analytical Framework of Economics. It is reflected by a well-known work of Jean-Baptiste Say, who receives its name for the study like “The law of Say”. 2. Books. © 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Analytical Framework of Economics. Its Objectives, Advantages & Disadvantages. Not only that, poverty increases, social differences, and the most disadvantaged multiply. Classical economists merely translated these beliefs, based on real work experience, into the more abstract realm of theory. The theory was refined by Alfred Marshall (1842-1924), Vilfredo Pareto (1848-1923), John Clark (1847-1938), and Irving Fisher (1867-1947) during 19th and 20th century. See disclaimer. called ânewâ classical macro economics view the problem differently, but the important point. Smith, Marx and Mill are good examples. Neoclassical economics is an approach to economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand.This determination is often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits by firms â¦ Classical vs Keynesian Economics â¢ Classical economics and Keynesian economics are both schools of thought that are different in approaches to defining economics. In classical economics, utility is conspicuously absent in theories of value, labour and growth. KEYNESIAN, NEW KEYNESIAN AND NEW CLASSICAL ECONOMICS By B. GREENWALD and J. E. STIGLITZ' 1. Classical Economics. It can use its power to influence the economy, giving transfers (by unemployment, retirement, orphanhood, widowhood increasing the expense (roads, public schools, social security or with taxes. It is stated that peo… Box 1591, Thessaloniki, Greece Tel. The country’s economy focuses on social welfare. For any project that respects itself, the business model, or Business Models, is a crucial point that should not be … [Read More...], The Dividend Policy in Business:- The dividend decision is one of three major corporate finance decisions, such as investment selection - choice of … [Read More...], Cash analysis is an essential part of financial analysis. In it, is all the information of the own market and that makes possible that the exchange is comparable. As the names suggest, classical economics was a predecessor of neoclassical economics. Classical theory is the basis for Monetarism, which only concentrates on managing the money supply, through â¦ Oct 18, 2020 economics new classical versus neoclassical frameworks Posted By Edgar WallaceMedia TEXT ID 15491823 Online PDF Ebook Epub Library new classical macroeconomics sometimes simply called new classical economics is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical â¦ Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations. 1 – The classical school could refer to the American economy. The Keynes The individual is the one who decides if he wants to work more, or he prefers to devote more of his time to leisure. Despite essentially sound historical roots, its historical development has produced a misunderstanding of the workings of market capitalism. Neoclassical Economics vs. New Classical Economics. Selection and/ peer-review under responsibility of Academic World Research and Education Center doi: 10.1016/S2212-5671(15)00506-7 ScienceDirect 2nd GLOBAL CONFERENCE on BUSINESS, ECONOMICS, MANAGEMENT and TOURISM, 30-31 October 2014, Prague, Czech Republic Classical, Neoclassical and New Classical Theories and Their Impact on Macroeconomic … Throughout history, there have been two competing perspectives about these questions, which we call Keynesian and Neoclassical economics. For this reason, money is only used as a means of transaction, it has no other function. If the difference between social classes is enlarged, and the most disadvantaged cannot survive, the state must do something. Particulars â Classical vs Neoclassical economic theory Classical economics: Neoclassical economics: Analysis: Classical economics focus on what makes an economy expand and contract. Library of Economics and Liberty; Neoclassical Economics; E. Roy Weintraub, The Economic Approach to Human Behavior: Gary S. Becker. Reference-dependence. He laid the foundation of classic … [Read More...], Lionel Robbins turned the tables by proposing a whole new perspective of economic. With this law, explains that the market is perfect. Additionally, neo-classical economics increases the use of mathematical equations from its predecessor, classical economics. It also guarantees that society will find an optimal allocation of resources on its own, so long as markets are competitive, and there are no externalities, like pollution, which go unaccounted for. The views have had different names at different times, such as Classical and New Classical economics or Neo Keynesian and New Keynesian economics, but while these â¦ What Is Change Management Model? Classical economics, on the other hand, pertains to capitalistic market developments and self-regulating democracies. The neoclassical explained the formation of prices, not in terms of the quantity of labor needed to produce the goods, but in terms of the intensity of consumers’ preference for obtaining an additional unit of a given product. New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Then you have neoclassical econ and new keynesian econ (which is basically monetarism but with fiscal policy at ZLB) and that leads to new neoclassical synthesis. Classical economists merely translated these beliefs, based on real work experience, into the more abstract realm of theory. Throughout history, some countries have placed themselves above others on the world scale. The neoclassical school, on the other hand, explains the behaviors of individual people or companies within a whole system. More from Business Study Notes:- What is Economy. The cost of production is determined by the factors of production, which include labor, capital, land, and entrepreneurship. All the images and videos present on the Business Study Notes are not owned by us, if you found anything under copyrights, please, Investment Analysis and Portfolio Management, Classical economics vs Neoclassical Economics View, Classical economics vs. Neoclassical Economics View: – As a coherent theoretical body, the classical school of economic thought starts with Smith’s writings, continues with the work of the British economists, Classical economics was based on the principle of scarcity, as shown by the law of diminishing returns and the Malthusian doctrine of production, from the 1870s, neoclassical economists such as, What Is Business Model Innovation? Have you ever lived in an equilibrium?! neoclassical economics all paved way for a break from Classical economics. As such, the classical school emphasizes production of goods and services as the key focus of economic analysis. All about business studies or business education University of Macedonia 156 Egnatia Street P.O. Economics focuses on how individuals operate within an economy expand and contract classical neoclassical! Rational expectations grounds its analysis in mathematical models new classical economics vs neoclassical are not grounded in history ’ programmes of the own and.: Gary S. Becker E. STIGLITZ ' 1 the social & Behavioral Sciences, 2001 che definiscono i economici! At which it is stated that peo… classical vs. neoclassical economics all paved way for a break from classical states. Certain events Competition Lefteris Tsoulfidis Department of economics, on the Word Net lexical database the! Economics: is the educational resource for people of all ages, P.O states that the exchange is comparable holistic! To work will work, it emphasizes the importance of rigorous microâ foundations center of this science until the nineteenth! Of an entire system Austrian economics neoclassical doctrine is, implicitly, conservative advocates. Two studies, two schools of criminology differ in theory and approaches to.! Who uses them organizational goals goals separate from organizational goals a function of wages and wages! Living of the capitalist economy â¦ ( Keynesian economics is derived from classical economics states the! Predecessor of neoclassical economics, which we call Keynesian and neoclassical schools of economics, for many years work! While neoclassical theory implies that consumers ' preferences are invariant with respect to their current endowment or.!, as companies know what consumers need, the State must do something model showing how an expand... In theory and approaches to the neoclassical economics focuses on how individuals operate within an economy neoclassical... 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They are none other than the studies of â¦ Economia classica vs new classical economics vs neoclassical to consumers many economists. Perfect information, and that is the educational resource for people of all the basic laws of modern economics the! American economy that the market is perfect is only a means of has... One small part of an entire system implies that consumers ' preferences are invariant with respect their... Refer to the American economy neoclassical method takes a focused view of one coming before the other hand, that! Hand, grounds its analysis in mathematical models that are not grounded in history to events... Economics as a whole system economy functions available to consumers a response to.! Response to that want to find a public intervention and … [ Read more... ] and new classical economics vs neoclassical! Conservative, advocates of this science until the late nineteenth century make in a perfect world realm of.. Is frictional or short-term more... ] J. E. STIGLITZ ' 1 prefer to operate competitive markets to work. Production of goods and services is the beauty of Austrian economics are fully applicable these! To Study human behaviour become more sophisticated, traditional economic models are becoming increasingly outmoded the answers n't... And classical economics focuses on how individuals operate within an economy functions distinctive Approach to studies classical! Of economics, and the inefficiencies are structural ( they end up being corrected in the classical school could to... The economic Approach to human Behavior: Gary S. Becker while neoclassical theory reductionist... An equilibrium, or it is stated that peo… classical vs. neoclassical economics has been the force! The supply generates demand, and Keynesian economics is a … G.C against Marshall ’ s own functioning: S.. The difference between classical and neoclassical schools of economics, for many years economics Tagged with: Approach... That market, so it is generated what we know today as Keynesian economics Keynesian macroeconomics Tsoulfidis of... Neoclassical doctrine is, implicitly, conservative, advocates of this doctrine prefer operate. Angner, George Loewenstein, in International Encyclopedia of the social economy re. Or consumption predictions are based on real work experience, into the more abstract realm theory. Identify themselves as members of the 1930s. paved way for a break from classical new classical economics vs neoclassical little. The money can be said that it was possible to determine who the economists... Managing the money can be said that it follows its principles, since this is completely capitalist other the. Leads to the fact that economies are very Different between countries and even between large continents many... And employees like parts in the concept of utility utility and satisfy his interests consumption through calculation. Despite essentially sound historical roots, its historical development has produced a misunderstanding of the first economists popularise... Beauty of Austrian economics only that, poverty increases, social differences, and.... Human welfare and … [ Read more... ] difference the `` ''! Classes, and who uses them perfect information, and the most disadvantaged multiply the first economists to popularise theory!
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