A Keynesian view would state that the government should have total control of th

Question

A Keynesian view would state that the government should have total control of the economy through fiscal (and monetary) policy. A classical view would state that the "invisible hand" (lack of government control) will guide the economy. Which is the correct view?
A Keynesian view would state that the government should have total control of the economy through fiscal (and monetary) policy. A classical view would state that the "invisible hand" (lack of government control) will guide the economy. Which is the correct view?

Explanation / Answer

The correct view between classical and Keynesian perspective depends on the situation occurs in the economy. A typical example is how the Keynesian view was incorporated in the economics school of thoughts during the great depression in 1929. Keynes challenges the neoclassical economics criticizing the fact that the free market would lead to full employment only in the short period of time till wages are flexible. He argued that demand is inadequate and would lead to prolonged unemployment until a fiscal or monetary policy is not employed.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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