Question

Economists from all theoretical persuasions criticized the American Recovery and Reinvestment Act. The "Stimulus Package" was arguably a Keynesian measure so why would a Keynesian economist be critical of it? Why would neoclassical economists be critical?

a) Keynesians criticize the size of the stimulus, neoclassicals its focus on demand.
b) Keynesians critique the focus on demand, neoclassicals the size of the stimulus.
c) Both criticize the emphasis on demand-side policies.
d) Both praise the Act's effectiveness in addressing the recession.

Answer 1

Keynesian economists may criticize the size of the stimulus, while neoclassical economists may critique the focus on demand-side policies.

Step-by-step explanation:

Keynesian economists may criticize the American Recovery and Reinvestment Act because they believe the size of the stimulus was not adequate to fully stimulate the economy. Neoclassical economists, on the other hand, would be critical of the focus on demand-side policies, as they argue that the economy will naturally correct itself over time without the need for government intervention.