Discussion on the Keynesian Critique of Classical Macroeconomics
Discuss the Keynesian critique of classical macroeconomics. How does Keynesian economics depart from the policy traditions of classical economics?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/economics/economic-history-and-theory/discussion-on-the-keynesian-critique-of-classical-macroeconomics-2ge
...hat's wrong with the economy and re-establish the equilibrium.
Keynes' IS-LM model took issue with this view in several key areas that you might discuss:
-Classical theory states that prices and wages adjust quickly to external shocks.
-Keynes' model has prices that adjust sluggishly as a result of things like menu costs, shoeleather costs, long-term contracts, and production constraints.
-As a result of the previous tenants, classical theory predicts the economy is always close to a general equilibrium while ...