Low Employment Generation

Since nationalized economy doesn't allow private sector to come and compete, the level of employment doesn't increase much. With the increase in capital investment through privatization more and more industries will be set up and this will definitely increase the level of employment in country.

Increase in Velocity of Money is Ignored

This theory ignores any increase in velocity of money altogether. If velocity of money in circulation is 5 and quantity of money is 100. It means that 100 Rupees change 5 hands and 100 Rupees creates 500 Rupees worth of transactions in the economy. Now, if quantity of money increase to 200, both the velocity and amount of money transactions should increase.

Income Effect on Price

Price Increase due to a lot of factors. It doesn't only increase with the increase in quantity of money. In the time of great depression in America, people had low incomes. The increase in quantity of money didn't increase prices because of the low income of the people. Therefore, prices are also affected with the level of incomes because it determines the purchasing power of people.

Increase In disparity Between Rich and Poor Countries

International trade widens the gap between rich and poor countries. Poor countries merely become markets for the products of rich countries. Poor countries export very little and have to import more goods than very export. Therefore, they almost always face adverse balance of payments.

Comparative Loss

Comparative advantage rests with developed and industrial countries who are usually rich in resources. Rich countries have access to technology and adept labor which can produce a good cheaper than people working on old methods in developing counties. This furthers the difference between rich and poor countries.