Question

would a neoclassical economist consider "consumer confidence" to be a useful economic indicator? how would a keynesian dosagree?

Answer 1

• Neoclassical Theory focuses on how the perception of the usefulness of products influences supply and demand. In other words , the Market force is driven by consumer because consumer's aim is customer satisfaction and the supplier's aim is profit maximisation.
• These self-interests drive voluntary exchange in free Economy setting price levels of quantities in equilibrium. Thus "Customer confidence" is a very useful economic indicator according to this theory.
• Neoclassical economist believe in free market without government intervention

Keynesian Theory:- The Keynesian is founded on the philosophies of John Maynard Keynes who is referred as the father modern mixed economies.

According to this theory, the classical theory works well under normal circumstances ,but at the time of crisis, the economy starts crumbling, and is no longer capable of sustaining itself, then "Customer confidence" is no longer a useful economic indicator. In such times , it is the government's responsibility to step-in in order to correct the imperfect economic conditions for the welfare of the citizens

Please consider giving a like if you find this useful.Thanks?