The difference between the classical approach and the Keynesian approach to fiscal policy is
A)Keynesians believe that natural forces in the economy would tend toward full employment
B)Keynesians believe that natural forces in the economy would not tend toward full employment,but they were distrustful of government's ability to stimulate the economy
C)classical economists believe that the economy would not achieve its potential GDP but that any action of the government would make matters worse
D)Keynesians believe that it may be necessary that government increase aggregate demand so as to stimulate output and employment,if the economy is to achieve its potential output
E)both the classical economists and Keynesians were equally distrustful of government intervention in the economy

Question

Quizplus · Accepted Answer

The Keynesian approach advocates for government intervention to increase aggregate demand in order to stimulate output and employment, especially during economic downturns. The classical approach, on the other hand, asserts that market forces would ultimately lead to full employment, and any government intervention could worsen the situation.

The Difference Between the Classical Approach and the Keynesian Approach