Question

Are you a Classical or Keynesian economist? Pick a perspective and defend.

Answer 1

Answer: I support Keynesian Economics. As Keynesian Economics supports the intervention of government in regulating the market system which keeps financial crisis at a bay by its different monetary policies. The govt. has the power to boost its economic condition during recession by investing in the market. Govt's timely intervention could save unemployment rate going uu during the recession period. While the Keynasian approach supports Govt. spending during the recession, it also suggests the govt. to controll its spending in a rapidly growing economy in order to curtail inflation. Besides people also feel relaxed when govt. controll the market system as there is less chances of unexpected price rise of products. Apart from all these, local industries are also saved from the competition from outside by leving tariffs on exported goods. If there were not any taxes on goods and articles, outsiders could easily occupy the local market which would leave many people unemployed due to disruption in the local industries. Imposing taxes on items helps govt. in collecting revenues which are later used for the welfare of its people and country.

On the other hand;In classical economics, government is expected stay away from the markets and involve only in defence, policing and protection of properties. Classical Economics support for the free market with minimum taxes and non interference of the govt. When govt. remains absent from the market policies, there may arise many inequalities in the market system. Organisations associated with production system might charge any price for its articles which poor people would not be able to afford. Capitalism would grow up in the market where richer people would be more richer using the labour of poor people in their production system at very lower cost. This leads to conflict between rich and poor and political and social instability occur out of it.