An important distinction between the classical and Keynesian view of the economy is that
A) Keynes stressed the supply side of an economy while classical economists stressed the demand side of the economy.
B) classical economists argued that output gaps were caused by shifts in the long-run aggregate supply while Keynes' maintained that output gaps were created by shifts in aggregate demand.
C) Keynes stressed the demand side of an economy while classical economists stressed the supply side of the economy.
D) classical economists argued that output gaps were caused by shifts in the long-run aggregate supply while Keynes' maintained that output gaps were created by wage and price rigidities.

Question

Quizplus · Accepted Answer

Keynes emphasized the importance of aggregate demand in influencing economic output and employment, while classical economists focused on the supply side, believing that markets would naturally adjust to full employment.

An Important Distinction Between the Classical and Keynesian View of the Economy