The Classical vs Keynesian Approach

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12 Questions

Which approach focuses on the role of aggregate demand in determining output and employment?

Keynesian Approach

Which approach emphasizes the self-adjusting nature of markets and the role of supply-side factors in determining output and employment?

Classical Approach

Which approach suggests that changes in the money supply have a significant impact on output and employment?

Monetarist Approach

True or False: The classical approach emphasizes the role of aggregate demand in determining output and employment.

False

True or False: The Keynesian approach focuses on the self-adjusting nature of markets and the role of supply-side factors in determining output and employment.

False

True or False: According to the classical approach, changes in the money supply have a significant impact on output and employment.

True

True or False: The classical approach focuses on the role of aggregate demand in determining output and employment.

False

True or False: According to the Keynesian approach, changes in the money supply have a significant impact on output and employment.

False

True or False: The Keynesian approach emphasizes the role of aggregate demand in determining output and employment.

True

Differentiate between the classical and Keynesian approach in determining output and employment.

The classical approach emphasizes the role of aggregate supply and the self-adjusting nature of markets in determining output and employment, while the Keynesian approach focuses on the role of aggregate demand and the impact of changes in the money supply on output and employment.

Explain the role of aggregate demand in determining output and employment according to the Keynesian approach.

According to the Keynesian approach, aggregate demand plays a crucial role in determining output and employment. Changes in aggregate demand, particularly through changes in government spending or the money supply, can have a significant impact on the level of output and employment in the economy.

Discuss the significance of changes in the money supply in the classical and Keynesian approaches.

In the classical approach, changes in the money supply are believed to have a significant impact on output and employment. However, in the Keynesian approach, changes in the money supply are seen as one of the key factors influencing aggregate demand, which in turn affects output and employment levels in the economy.

Study Notes

Test your knowledge on the determination of output and employment with this quiz! Explore the differences between the Classical and Keynesian approaches, and discover which approach focuses on aggregate demand, which emphasizes supply-side factors, and which suggests the impact of changes in the money supply on output and employment.

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