This is similar to the Keynesian economic policies, which recommend government intervention through fiscal and monetary policies to solve existing financial challenges like recessions and depressions hence providing instant results. Few variables are more fundamental to economics. Similarities in “Government Spending” in Keynesian and Classical Economics; One of the similarities is that, despite the classical economics rejecting government spending, they accept that, in the absence of personal spending and business investment the government should spend so that it can help the public sector, which will, in turn, create a conducive environment for private sector to thrive. and similarities of the se two schools ... A visual describing the evolution of the two majo r schools of economic thought and the ne w neo-classical . This discipline helps financial experts and policymakers to mathematically or statistically predict future economic and market behaviors. Moreover, the two theories conclude that people keep a certain proportion of disposable income for future consumption without paying much attention to the decline in the value of money. Let us know! The essay should point out similarities and differences between these two approaches to economic analysis. Thus, the resolution understands that people do save for future consumption. Please rate this article: capitalism economy over other forms of economic systems like socialism and communism. Both Keynes and Adam Smith, who is the founder of the classical theory, agree and favor the existence of capitalism economy over other forms of economic systems like socialism and communism. Here are some ways our essay examples library can help you with your assignment: Read our Academic Honor Code for more information on how to use (and how not to use) our library. , GEORGINA NDERITU Keynesian economics tends to view inflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment. As the names suggest, classical economics was a predecessor of neoclassical economics. Essays may be lightly modified for readability or to protect the anonymity of contributors, but we do not edit essay examples prior to publication. Rate of interest, being a purely monetary phenomenon, brings equality between demand and supply of money. "Classical" and "neoclassical" are the names for two philosophical approaches to economics. Why is there more than one way of looking at the economy? This is similar to the Keynesian theory, which has a perception that when interests’ rate goes up, the level of income will be less hence making it difficult for people to save. reliance on textbook models of economics" [Stiglitz 1999, 3]. Classical economics was founded by famous economist Adam Smith, and Keynesian economics was founded by economist John Maynard Keynes. This has led various macroeconomic ideas labelled "New Classical", "New Keynesian" or even "New Neoclassical". , GEORGINA NDERITU , Dr. Howard Fields, No Comment, January 4, 2018 John Maynard Keynes in which he claimed that the government must intervene in the matters concerning the economy of the country hence ensuring that the output of the nation is raised thus creating employment developed this theory. , No Comment, December 21, 2017 More recently we have "Mainstream" economics which is an attempt to synthesis many different economic ideas including those of the historic Neoclassicals I mention above and the Keynesians. Keynes highlights that technology leads to a gradual decrease in employment while Adam Smith, in his classical model, notes that introduction of technology leads to increase for work done while at the same time reducing the prices of goods due to efficiency and effectiveness brought about in the workplace. 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