Keynesian vs Classical - an Economic Perspective to Rekindle the Us Economy

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An essay on Keynesian Vs. Classical: An Economic Perspective to Rekindle the US Economy By P. V. Manohar Kiran Discussing Ø Which of the two major approaches to Economic policy (Keynesian or Classical) will lead the USA out of the economic crisis faster? Ø What are two differences between those two types of economic policies? Why this comparison The year 2008 saw the worst financial crisis in modern times, triggered by a highly unbalanced and overleveraged economic debacle in USA, which caused a ripple effect throughout the global economy, thereby dragging down even healthier and safer countries (economically) with itself. An instant analogy to the Great Depression of the 1930 was drawn, and till date arguments ensue upon the issues which caused both of these debacles respectively. The contending point in this argument is the analysis of the economic approach embraced by the policy makers of each time, and how they caused these financial meltdowns: namely the Classical approach to Economics which was dominant till the early decades of 20th century, and the Keynesian approach which is the current flavor of Ivy League economics. Classical vs. Keynesian: The Arguments The Classical approach is accused as being responsible for the cause of the Great Depression, and as stated above, the Keynesian approach resuscitated the global economy back then. The stagflation of 1970 caused a shift in economic policy making, resulting in the abandoning of Keynesian thought, but again, the 2008 Global meltdown is credited to the resurgence of Keynesian thought in US economic policy making. Hence, a decisive conclusion on the question as to which of these two approaches would truly resuscitate the US economy today, requires us to delve deeper into the understanding and the differences between the Classical & Keynesian Economics. The Classical approach dates back to the

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