Question

Select one of the following schools of economic thought: Keynesian, Chicago, and Austrian. Identify three keys points or beliefs that are held by that particular school. What are the macroeconomic policy implications of those beliefs? Explain your answer. Which school of economic thought do you find to be most convincing? Why?

****I can't use what's already posted and would like to use one besides Austrian.

Answer 1

Keynesian economics was a demand side economics based on the following three points;

1. Aggregate demand is influenced by many economic decisions- public or private.

2. Prices and wages respond slowly to the changes in supply and demand in the economy which leads to shortages and surpluses of labor in the economy.

3. Changes in aggregate demand, whether anticipated or unanticipated have their greatest short run effect on real output and employment, not on prices.

Since it is demand side economics, thus Keynes was the believer of fiscal policy of the government which changes in tax rate and government expenditure influences aggregate output in the economy. During the time of Great Depression of 1930s, expansionary fiscal policy of the government helped in overcoming depression in the economy. Keynesian economics is the most convincing as it has helped various economies in overcoming recession and depression in the economy.