Many such beliefs form the difference between the two major schools of thought in economics: Classical and Keynesian economics. Keynes argued that as there is nothing inherent in the economy to move the SR into the LR SRAS = LRAS (NOTE: In diagrams taking a Keynesian Instead the economy was in crisis. In the following section I will review both presenting a short introduction There is no such automatic or self-adjusting system in Keynesian economics. Thomas. According to the classical economists there is automatic self-adjusting character of the economy. Classical Economics Vs. Keynesian Economics: The Key Differences. Classical Theory of EconomicsA theory of economics, especially directed toward macroeconomics, based on the unrestricted workings of markets and the pursuit of individual self interests. The views have had different names at different times, such as Classical and New Classical economics or Neo Keynesian and New Keynesian economics, but while these views have become more nuanced, the basic perspectives have remained the same. If such a force is there, depressions and booms can be easily avoided and fluctuations averted. Keynesian Macroeconomic Model In his famous book The General Theory of Employment, Interest, and Money (1936), Keynes rejected the classical model. Classical economics relies on three key assumptions--flexible prices, Says law, and saving- investment equality--in the analysis of macroeconomics. Among the topic of unemployment we can basically distinguish two approaches: the Classical theory of unemployment and the Keynesian theory of unemployment. 4. Classical Versus Keynesian Economics: Definition of Classical and Keynesian Economists: The economists who generally oppose government intervention in the functioning of aggregate economy are named as classical economists. The allocation of resources was not efficient, with much idle capital and labor. 13 B, Say, David Ricardo, J. S. Mill. Classical vs Keynesian. Keynesian Vs New Classical Ib Economics PPT Presentation Summary : Keynesian SRAS=LRAS. Should the government influence the economy or stay away from it? Classical economics and Keynesian economics are both schools of thought that are different in approaches to defining economics.Classical economics was founded by famous economist Adam Smith, and Keynesian economics was founded by economist John Maynard Keynes. Nowadays, the extended literature of labor economics is composed by many theories and models. Chapter 11 Classical vs. Keynesian - Chapter 11 Classical vs. Keynesian * * * * * * * * * * Keynesian Economics Works only on the AD curve Assumes AS is stationary Critics of Keynes: But this will ... | PowerPoint PPT presentation | free to view 5. In 1936 the world was in depression. The classical contributions constitute the core of ‘Micro Economics’. 6. The main classical economists are Adam Smith, J. The theories of Keynesian economic, which were authored by John Maynard Keynes, are built upon classical economics, founded on the theories of Adam Smith, often known as the "father of capitalism." To understand the Keynesian economics vs. classical economics: similarities and differences, it requires an in-depth view of both types of economic theory. Should economic policy be focused on long term results or short term problems? While Keynes differs from Smith, he and nearly all economic philosophers who followed Smith agree with some of that thinker's founding principles. However, both opinions are similar because they share the common belief that humans will always save up lots of disposable income without taking note that the value of the money depreciates.