Question

Which of the following is correct for the classical economists and Keynesian economists?

A. classical economists believed the market would correct itself in the long run, Keynesian economists believed the long run was excessive
B. classical economists believed in capitalism, while Keynesian economists believed in needed government intervention
C. classical economists believed in LRAS, while Keynesian economists believed in SRAS
D. classical economists believed in laisezz faire, while Keynesian economists believed in limited government intervention during the Great Depression
E. all of the above are true

Answer 1

The correct statement is that classical economists believed the market would self-correct in the long run, while Keynesian economists thought government intervention was needed to address economic downturns in the short run.

Step-by-step explanation:

The question asks which statement is correct about the views of classical economists versus Keynesian economists. The correct statement among the options provided is A. Classical economists believed the market would correct itself in the long run, while Keynesian economists believed that waiting for the long run could be excessive and that government intervention was needed to correct economic downturns in the short run.

Classical economists, or what is later known as neoclassical economists, believed in the self-regulating nature of markets with minimal government intervention, and were characterized by the idea that prices and wages would adjust flexibly. This aligns with their belief in a 'laissez-faire' approach to policy, meaning the government should generally stay out of the economy.

On the other hand, Keynesian economics emerged after the Great Depression and suggested that the government should play an active role in the economy, especially during downturns, to stimulate demand through fiscal and monetary policy.