Question

Explain the differences between classical theory and Keynes theory

Answer 1

Sr No	Keynesianism	Classicism
1	Short-run equilibrium	Long-run equilibrium
2	Saving is a vice	Saving is a social virtue
3	The function of money as a medium of exchange and store of value	The function of money is to act as a medium of exchange
4	Macro approach to the national problem	Micro foundation to macro problems
5	State intervention is advocated	Champions of Laissez-faire policy
6	Applicable to both full employment and less than full employment level	Applicable only to the full employment situation.
7	Capitalism has inherent contradictions	Capitalism is well and good
8	Unbalanced budget	Balanced Budget
9	Rate of interest is a flow	Rate of interest is a stock
10	Demand creates its own supply	Supply creates its own demand.