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Question
Explain the differences between classical theory and Keynes theory
Distinguish Between
Solution
| Sr No | Keynesianism | Classicism |
| 1 | Short-run equilibrium | Long-run equilibrium |
| 2 | Saving is a vice | Saving is a social virtue |
| 3 | The function of money as a medium of exchange and store of value | The function of money is to act as a medium of exchange |
| 4 | Macro approach to the national problem | Micro foundation to macro problems |
| 5 | State intervention is advocated | Champions of Laissez-faire policy |
| 6 | Applicable to both full employment and less than full employment level | Applicable only to the full employment situation. |
| 7 | Capitalism has inherent contradictions | Capitalism is well and good |
| 8 | Unbalanced budget | Balanced Budget |
| 9 | Rate of interest is a flow | Rate of interest is a stock |
| 10 | Demand creates its own supply | Supply creates its own demand. |
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Comparison of Classicism and Keynesianism
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