Essay: Keynesian theory VS Classical theory

19 Oct

Essay: Keynesian theory VS Classical theory

Sample Essay

The Keynesian theory was formulated to deal with some failures by the classical theories. As it is seen, the Classicals were out to stabilize the government’s budget which would worsen the beneath problem because this could be achieved by lowering demand for labor and products. Keynes’s thoughts controlled the views of Franklin D Roosevelt that depression was a cause of little buying power.

Many people saw the real success of Keynes theory at the beginning of the Second World War which gave a blow to the economy of the world, did away with uncertainty and pressurized rebuilding of the capital which was destroyed. Keynes school of thought proposed that dynamic government strategy could be successful in the management of the economy. Keynesians advocated for fiscal policies which were countercyclical meaning policies which act in opposition to the tides of business cycle. Keynes argued that governments had to solve their problems in the short-run instead of watching the market forces solve them in the long-run.

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