Question

3. What historical developments and concerns motivated and what beliels Chiara boog bro992 sto ng ari ni angol ns vd b olts ad obotinilsborn magas 2526 la voz mol nisiqua. classical economists? The school of Keynesian economics? 4. What are the three main modes of economic investigation? Describe each.

Answer 1

A little after the birth of western capitalism and industrial revolution, the classical theory was developed.Classical economists explained the inner workings of capitalism .In Classical economic theory countries moved from the rule of kings to capitalistic democracies.The characteristics are that markets work better when there is least gvernment interference. There was strong belief in laissez fairre and efficiency of free markets for economic development.

Keynesians believe that consumers demand is important in an economy.So keynesian theory was in support of expansionary fiscal policy.Belief was on government spending on infrastructure,unemployment benefits as well as education.However keynesian policies led to inflation.