Question

The differences between Classical, Keynesian, Monetarist, and how each of the school of thought stands for with regard to economic policies; Their differences in their view with regards to: wages and prices, AS curve, Monetary policy or Fiscal policy.

Answer 1

Classical::
Classical economists hold that prices, wages and rates are flexible and markets always clear. As there is no unemployment, growth depends upon the supply of production factors and the supply of money automatically adjusts to the demand, and banks can only control the term on which loans are made.

Keynesian::
Keynesian economics by John Maynard Keynes. Keynesians focus on aggregate demand as the principal factor in issues like unemployment and the business cycle. They believe that the business cycle can be managed by active government intervention through fiscal policy (spending more in recessions to stimulate demand) and monetary policy (stimulating demand with lower rates).

Keynesian economists also believe that there are certain rigidities in the system, particularly "sticky" wages and prices that prevent the proper clearing of supply and demand.

Monetarist::
The Monetarist school by Milton Friedman. Monetarist economists believe that the role of government is to control inflation by controlling the money supply. Monetarists believe that markets are typically clear and that participants have rational expectations.

Monetarists reject the Keynesian notion that governments can "manage" demand and that attempts to do so are destabilizing and likely to lead to inflation.