Apa beda Classical vs Keynesian ?

Summary

This video explores the key differences between Classical and Keynesian economics. It explains how Classical economics emphasizes the supply side, with a focus on flexible prices and long-term full employment. In contrast, Keynesian economics focuses on aggregate demand and the need for government intervention, especially during economic downturns. The video highlights the concepts of flexible vs. sticky prices, full employment, and the role of government in restoring equilibrium. Ultimately, it contrasts the two schools of thought on how economies function and the role of government in stabilizing markets.

Takeaways

• 😀 Flexible prices adjust quickly in response to changes in demand and supply, typically in the long term.
• 😀 Sticky prices are rigid and do not change easily, even when there are shifts in demand or supply, usually in the short term.
• 😀 Classical economics views output as determined by supply forces, with the aggregate supply curve being vertical.
• 😀 According to classical theory, changes in aggregate demand only affect prices, not the overall output of the economy.
• 😀 Classical economics assumes the economy is always at full employment, and deviations from this are temporary.
• 😀 In classical economics, the market self-corrects without the need for government intervention.
• 😀 Keynesian economics, championed by John Maynard Keynes, emphasizes the role of aggregate demand in determining economic output.
• 😀 The aggregate supply curve in Keynesian economics is horizontal (perfectly elastic), meaning changes in demand can influence output without raising prices.
• 😀 Keynesian economics asserts that the economy can be below full capacity, as seen during the Great Depression, and requires government intervention to stimulate demand.
• 😀 Unlike classical economics, Keynesian theory accepts that the economy may not naturally reach full employment and that market imperfections exist.
• 😀 Government intervention, as advocated by Keynesians, is seen as necessary to restore full employment and correct output gaps in the economy.

Q & A

What is the main difference between classical economics and Keynesian economics?

The main difference is that classical economics focuses on supply-side factors, assuming the economy operates at full employment with flexible prices. Keynesian economics, on the other hand, emphasizes demand-side factors and suggests that economies can operate below full capacity, requiring government intervention.

What does the term 'flexible prices' refer to in economics?

Flexible prices refer to prices that adjust quickly to changes in supply and demand, allowing markets to reach equilibrium and clear efficiently in the long run.

What are 'sticky prices' in economic terms?

Sticky prices are prices that are rigid or slow to adjust to changes in supply and demand. They are typically seen in the short run, often due to contracts, menus, or established wage rates.

How does classical economics view the relationship between aggregate demand and output?

Classical economics views aggregate supply as vertical, meaning output is determined by supply factors and is unaffected by changes in aggregate demand. Instead, changes in demand only influence prices, not output.

What is the classical economic view on full employment?

In classical economics, full employment is assumed to be the natural state of the economy. Any deviation from full employment is seen as temporary, with market forces quickly restoring full employment without government intervention.

According to Keynesian economics, what causes output fluctuations in the economy?

Keynesian economics suggests that output fluctuations are primarily driven by changes in aggregate demand. In times of insufficient demand, output can fall below full capacity, leading to unemployment and underutilized resources.

How does the Keynesian model differ from the classical model in terms of the aggregate supply curve?

The Keynesian aggregate supply curve is often depicted as horizontal in the short run, indicating that output can change in response to shifts in demand, while prices remain constant. This contrasts with the vertical aggregate supply curve in classical economics, where output is fixed and only prices adjust.

What role does government intervention play in Keynesian economics?

In Keynesian economics, government intervention is seen as essential to boosting demand during economic downturns. This intervention, through fiscal policies like increased government spending or tax cuts, can help stimulate economic activity and restore full employment.

Why does the classical economic model assume that the economy always operates at full employment?

The classical model assumes that market forces, such as competition and price adjustments, naturally bring the economy back to full employment. Any deviation from this is considered temporary, as wages and prices adjust to restore equilibrium.

What economic conditions led to the development of Keynesian economics?

Keynesian economics was developed in response to the Great Depression, a period of deep economic downturn in the 1930s, during which output fell dramatically, and unemployment rose sharply. Keynes argued that market mechanisms alone could not resolve these issues, and government intervention was necessary to boost demand.