Wednesday, May 27, 2009

Classical, Keynesian, Monetarist View

I need to download the following into my brain:

Classical view:
* Economy self-regulating and always at full employment
* Aggregate demand/supply flunctuations: technology is the most significant influence
* Money wage that lies behind the short-run aggregate supply is instantly & completely flexible

Keynesian view:
* Economy if left alone would rarely operate at full employment
* Active help from fiscal policy & monetary policy is required
* Expectations are the most significant influence on aggregate demand
* Money wage that lies behind the short-run aggregate supply is extremely stick in the downward direction

Monetarist view:
* Economy is self-regulating and normally operate at full employment provided that monetary policy is not erratic and that the pace ofmoney growth is kept steady
* The quantity of money is the most significant influence on aggregate demand
* Money wage that lies behind the short-run aggregate supply is sticky

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