Question

Both Classical and Keynesian Theories about the relationships between real GDP and the price level hinge on specific assumptions. In your initial post to this discussion, address the following prompt based on what you've learned in this module about the assumptions and criticisms of Classical and Keynesian Economic Theories: Which approach appears to best explain the current economy? Provide support for either theory. In addition to posting your own response to the question posed, you are required to read and respond to AT LEAST TWO of your classmates' posts. When responding to others be sure to engage your classmates by providing differen examples of why you agree or disagree with what they have shared or discuss something that relates to what your classmate has stated. Be sure to support your comments. We want to have a meaningful thought-provoking discussion and that can't happen if we all just say how much we liked the other person's comments.

Answer 1

Keynesian approach best explain the current economy.Keynesian economics says that government should increase demand to boost growth.They believe that consumers demand is the main factor that drives the economy.The Keynesian approach supports expansionary fiscal policy and believes in government spending on infrastructure .Increase in spending will increase aggregate demand and spending is necessary to have full employment in the economy.Keynes was in favor of deficit spending during the contractionary period. President Trump is making attempt to increase the debt during the stable economic growth which will lead to boom and bust cycle.As against the Keynesians , Classical economists promote laissez faire policy ie supply and demand regulate the business cycle.It stress on limited government.It discourages government spending as it crowds out private investment.Thus the present economy is based on Keynesian approach.