Did Keynesian or classical economics support laissez faire policy?

Did Keynesian or classical economics support laissez faire policy?

Did Keynesian or Classical economics support laissez-faire policy? Classical economics supported laissez-faire policies because they believed business cycles were temporary glitches, which the market would correct. Keynesians are more likely to emphasize the fallacy of composition.

Which has the more pessimistic view of the problems facing the US economy structural stagnation theory or conventional business cycle theory?

Structural stagnation theory is more pessimistic because the economy remains stuck in a period of growth that is lower than the economy’s normal growth rate, whereas in a business cycle the economic downturn is followed by an upturn that returns the economy to its long-term growth rate.

In what way is potential output not purely a physical measure based on the number of workers and existing factories?

Potential output is not purely a physical measure based on the number of workers and existing factories because: factories may be technologically obsolete. What has happened to growth rates in Western Europe and the United States in recent years? The total number of unemployed is 14 million.

What type of unemployment is best studied within the short run framework?

Cyclical unemployment

What is structural stagnation?

A structural stagnation is a short period of declining output whereas a recession is a period of protracted slow growth and high unemployment. The structural stagnation theory is more pessimistic because it argues that the economy must undergo structural changes before it will return to its long-term growth trend.

What causes structural stagnation?

Structural Stagnation A stagnant economy can also result from longer-term, structural conditions in a society. Stagnation can happen in an advanced economy with economic maturity. Mature economies are characterized by slower population growth, stable economic institutions, and slower growth rates.