Answer to Question #259985 in Macroeconomics for shon

Question

How do Keynesians and classical differ in their beliefs about how long it takes the economy to reach long-run equilibrium? What implications do these differences in beliefs have for Keynesian and classical views about the usefulness of anti recessionary policies? About the types of shocks that cause most recessions

Answer 1

Keynesians believe that prices take several years to adjust while classical believe that in the face of stock prices take a few months to adjust and restore equilibrium

Classical economics puts little emphases on the use of fiscal policy to manage aggregate demand while Keynesian implies that fiscal policy should be used more so in a recession