Answer to Question #211004 in Macroeconomics for Faiza Sehar

Question

What might Keynesian policy maker recommend to bring the economy back to original equilibrium?

Will this policy be successful?

Will a classical policy maker agree with Keynes recommended policy? Explain.

Answer 1

A policy maker can recommend the government to pump spending into the economy by building roads and bridges and other public works.Yes it will be useful since there will be efficient transportation and movement of goods and services from one place to another.

No since the Classical policy, induces a policy that limits the involvement of the government in managing the economy while Keynes supports the active involvement of the government in managing the economy especially during recession and depression.