Compare and Contrast Classical and Keynesian Economics

Topics: Keynesian economics, Unemployment, John Maynard Keynes Pages: 2 (452 words) Published: November 25, 2012
Compare and Contract classical and Keynesian economics
The differences between classical and Keynesian economics are numerous, but can be categorized into a few key areas. In general, classical economists would like to see the government stay out of the economy, and try to influence the economy as little as possible. Keynesian economists, who follow the philosophy of famous economist, John Maynard Keynes, by contrast, do not strongly advocate for a position. Those that follow the policy generally believe in strong fiscal policy, and a central banking system that can help to improve national economies. One of the areas of difference between classical and Keynesian economics deals with monetary policy. The classical economists hold to a belief that governments should not influence economies, or pursue a "hands-off" policy, often refered to by the French term, laissez-faire. The Keynesian economists believe that demand is very much influenced by government decisions, both at the federal level and lower levels. In other words, Keynesians believe governments do and should influence the business cycle. Another big difference between classical and Keynesian economics deals with the outlook each one has concerning the future. Classical economists tend to be more focused on long-term results. Keynesians, on the other hand, tend to be focused on shorter-term problems that they believe may need immediate attention. Those subscribing to the Keynesian philosophy tend to believe that short-term problems are not easily correctable, and will therefore influence the long-term outlook. nflation and unemployment are also big differences between classical and Keynesian economics. Keynesians tend to be more concerned with unemployment than inflation. Classical economists, while concerned about unemployment to a certain extent, tend to be more concerned with inflationary pressures, believing inflation can be a bigger danger to the economy over the long term. One other difference...
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