2.(10 points) The current crisis in Venezuela is the worst economic crisis in th

Question

2.(10 points) The current crisis in Venezuela is the worst economic crisis in the nation's history. During the year 2016, consumer prices rose by 800% and the economy contracted by 18.6%, leading to a faltering economy with increased poverty and shortages. Some people argue that Venezuela's crisis is of the government's own making. Country's move away from free market capitalism and economic actions performed by the government, such as over spending and price controls contributed significantly to the current crisis. Who do is more likely to agree with the views presented above, a Classical economist or a Keynesian economist? Why?

Explanation / Answer

It has been argued that econimc crisis in the Venezuela was due to excess interference of government in the economy and adoption of policies by government that has moved the economy away from free market mechanism and towards the socialism with more than desired involvement of government.

Both Keynesian view and Classical view with respect to involvement of government in economy are opposite to each other.

While Keynesian economist is in favor of government intervention in the economy, Classical economist is against the intervention of government in the economy.

Since, the stated view indicates that it was due to the flawed government intervention in Venezuelan economy that has resulted in worst economic crisis in the nation's history, it is classical economist that is more likely to agree with views presented above as classical economist believe that it is government intervention in economy that is the receipe for disaster.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.