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Classical and Keynesian Economics Essay

Classical and Keynesian Economics Essay

Classical and Keynesian Economics Essay

                                         Category: English

Compare and contrast classical economics and Keynesian economics. What are the major differences between them?

Which model would you prefer? You may already prefer one because you are defending your school. Thoroughly explain your reasoning.

As a classical economist, what would you do for the current U.S. economy?

Your initial post should be a minimum of 300 words.

Requirements: 300 words 

Comparison of Classical and Keynesian Economics

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Comparison of Classical and Keynesian Economics

Classical economics concentrates on managing the supply of money through monetary policy while paying little emphasis on fiscal policy. On the other hand, Keynesian economics concentrates on the total spending of the economy and the effects on the output; hence emphasizes for the government to use the fiscal policy to balance employment and inflation. The major difference between classical and Keynesian economics is the government’s involvement in the economy of a country (Torr, 2019). Classical economics believes that a country’s economy is self-correcting, whereby it can be able to comfortably return to its equilibrium even without the government being involved. On the other hand, Keynesian economics believes that the government has to allow for the balance of the economy, especially when in recession.

I prefer the Keynesian economics model because it emphasizes the wellbeing of the economy, whereby it advocates for the use of the fiscal policy. The fiscal policy promotes strong and sustainable growth of the economy and helps in the reduction of poverty. With the help of fiscal policy, Keynesian economics manages the aggregate demand, hence supporting higher employment levels. Keynesian economics argues that the economy is not always at its full potential; thus, in times of recession, unemployment is widespread, and many businesses fail. To curb the unemployment cases, the government’s involvement in the economy will come in handy. The government will help control the relative inflexibility of prices and wages, hence increasing employment levels.

As a classical economist, I would focus on the economic growth and economic freedom of the economy. I would advocate for liberated markets where the government is not involved in dictating the prices of goods sold in the market. Free markets will be self-regulating since they will allow the prices and wages to freely adjust to the ups and downs over time leading to an efficient outcome hence improving the economy of the United States. I will ensure I manage the supply of money wisely to maintain equilibrium in the economy of the United States, whereby money supply will not run out at any given time.

References

Torr, C. (2019). Equilibrium, Expectations and Information: A Study of the General Theory and Modern Classical Economics. Routledge.

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