A CASE OF CLASSICAL AND KEYNESIAN MODELS 2
A Case of Classical and Keynesian Models, Unemployment and New Developments
In this essay we would try to elaborate on the macroeconomic ideas arising out of classical and Keynesian schools of thought and how each thought-process in similar and, at the same time, different from each other. We would also describe how both though-processes try to address the problem of unemployment facing an economy and what new macroeconomic ideologies have surfaced since 1980s.
Similarities and Differences in Keynesian and Classical Economic Thought
As Keynesian model of economic thinking succeeds the classical models set forth by Ricardo and his predecessors, …show more content…
689), which consists of total consumption, investments, government spending and net exports, to bringing production and unemployment levels to their natural equilibrium. The third difference is that classical models do not suggest government’s intervention justifiable whatever the economic circumstances are but Keynesians think that the government has as a crucial role in managing economic depressions and downturns.
How Keynesian and Classical Economists Address the Issue of Unemployment
Both the models have appropriate solutions in how they tackle the issue of unemployment. Classical model considers the aggregate supply side of the economy as the single most important determinant of nations’ natural level of employment and potential output, and suggests that the flexible wages and uninterrupted price system (Rittenberg & Tregarthen, 2012, p. 689) would give rise to smooth employment levels in the long run. It means that
A CASE OF CLASSICAL AND KEYNESIAN MODELS
A Case of Classical and Keynesian Models, Unemployment and New Developments
In this essay we would try to elaborate on the macroeconomic ideas arising out of classical and Keynesian schools of thought and how each thought-process in similar and, at the same time, different from each other. We would also describe how both though-processes try to address the problem of unemployment facing an economy and what new macroeconomic ideologies have surfaced since 1980s.
Similarities and Differences in Keynesian and Classical Economic Thought
As Keynesian model of economic thinking succeeds the classical models set forth by Ricardo and his predecessors, …show more content…
689), which consists of total consumption, investments, government spending and net exports, to bringing production and unemployment levels to their natural equilibrium. The third difference is that classical models do not suggest government’s intervention justifiable whatever the economic circumstances are but Keynesians think that the government has as a crucial role in managing economic depressions and downturns.
How Keynesian and Classical Economists Address the Issue of Unemployment
Both the models have appropriate solutions in how they tackle the issue of unemployment. Classical model considers the aggregate supply side of the economy as the single most important determinant of nations’ natural level of employment and potential output, and suggests that the flexible wages and uninterrupted price system (Rittenberg & Tregarthen, 2012, p. 689) would give rise to smooth employment levels in the long run. It means that
A CASE OF CLASSICAL AND KEYNESIAN MODELS