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Comparisons Of Classical And Keynesian Thought. - School Essays

Comparisons Of Classical And Keynesian Thought.

In the comparison of the two thoughts one must understand that Classical
thought is one that has been around longer than Keynessian and it was in
all probability the only real school of thought from 1776 to the 1930's.
The Classical thought is one that had its origins in Britain and with
British's economists. As early as Adam Smith and until the great depression,
most all economists were Classical economics. As a whole they believed
that the self-correcting mechanisms of a market economy would continually
guide the economy toward full output and full employment. Market prices
would adjust to restore the economy to full employment and that if a slow
down or recession was to occur that ...

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did not work? Did the Government policy's
(those of the congress and the federal reserve) that were in place during
this time work? This is a Question that is still debated today.

The opposite approach is the Keynesian thought. This school of thought
would believe in a more active approach. That is the Federal Government and
the Federal Reserve should play an important role in attempting to
stabilize the economy by "fine-tuning", that is look for the problem, find
out what is wrong and fix it.

Probably the biggest test of not only our economy but also our
economists was the Great Depression. During this time it seamed that the
Classical approach was not working as expected and the government as well
many economists could not explain why. In an effort to boost the economy
the Federal Government (Congress) raised taxes and imposed stiff import
tariffs, this was the wrong thing to do as this only spread the depression
through out the rest of the world. This was of course a ...

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Comparisons Of Classical And Keynesian Thought.. (2005, April 9). Retrieved April 26, 2024, from http://www.essayworld.com/essays/Comparisons-Of-Classical-And-Keynesian-Thought/25062

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PAPER DETAILS

Added: 4/9/2005 11:55:57 AM
Category: Economics
Type: Free Paper
Words: 429
Pages: 2

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