Answer to Question #220208 in Macroeconomics for Prince bharti

Question

The model of income determination is called a keynesian model.what makes it keynesian and classical? Elucidate your argument

Answer 1

Accordingly, Keynesian AS curve tends to be drawn according to assumption which total expenditure is similar to total income. Total income gained tends to be spent fully various types of services and goods.

Based on the Keynesian model, equilibrium national income level tends to be weighed at a point in which aggregate demand curve tends to intersect aggregate supply curve. Based on definition, the output is similar to income on every aggregate supply curve's point.

Classical theory supports that supply brings up its demand. Marginal product schedule tend to be company's labor demand curve. Classical theory tends to propagate free market economy that the classical economists know it may contribute to full employment.