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Economic Schools of Thought

Economic Schools of Thought. Classical View Markets are naturally self regulating ( No Gov’t intervention necessary!) Recessions are temporary, Wages & Prices are flexible Keynesian View Economy is inherently unstable , Not self regulating

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Economic Schools of Thought

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  1. Economic Schools of Thought • Classical View • Markets are naturally self regulating (No Gov’t intervention necessary!) • Recessions are temporary, Wages & Prices are flexible • Keynesian View • Economy is inherently unstable, Not self regulating • Wages & prices are sticky (Gov’t intervention needed-) • Goal is usually to shift AD right! • Monetarist View • Money matters!----do not regulate economy—just control inflation • Low inflation will bring about low unemployment naturally… • Supply Side View • Incentives matter! Create incentives to increase LRAS • Focusing on AD is pointless---Promoting more AS is the answer!

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