Agree or disagree? and why? Keynes vs Classical COLLAPSE After comparing the two
ID: 1103140 • Letter: A
Question
Agree or disagree? and why?
Keynes vs Classical COLLAPSE After comparing the two models it's difficult to come to a definitive choice. I fundamentally agree with the Classical model of letting the economy sort itself out with minimal government influence and this has been practiced for centuries. However I'm not so sure it is a good fit for our modern global economy. An unregulated economy can lead to monopolies which eliminate any choice in the free market and leaves consumers at the mercy of companies that are providing the goods and services they need. Recessions may also take much longer to recover from without changes in policy at the state or federal level. Other aspects such as Says Law apply to a barter economy just fine but I struggle to see the connection to a monetary system. These factors make me lean more towards Keynesian economics even though it is focused on more short-run problems and solutions where as Classical has the long-run in mind.
Explanation / Answer
True, in today 's world role of goverment has increased. Government must ensure measures to pull economy out if recession. As Keynes argued that only goverment can boost aggregate demand through expansionary fiscal policy and bring economy out of recession .
Similarly playing grounds are not equal all around the world . To give power to engine of growth intervention of goverment us much needed.
Thus also in case of market failure regulation by government can prevent the inefficiency in market.