Keynes vs Classical

Classical vs. Keynes
The Classical and Keynesian approaches are similar because they are both theories which try to explain the economy and try to decide the best strategy to take during a time of recession and inflation. While they are alike because they are both economic theories, the content of both of these theories is very different. Either one has been deemed as the “perfect” solution, but we can learn a lot from these models, and try to come up with a “perfect” model that we can use in our world today.
First, we should look at some characteristics of both the Classical and the Keynesian models. The classical model assumes that everything goes into the economy. Classical economist believed that all money flows into the economy in some way shape or form. They say that money that is invested in banks, or stocks flows back in the economy through investments. Even when you have your money in the bank, it is being loaned to other people and the bank is making revenue from it. The Classical economist also believed in Say’s law which said people supply things to the economy so they have income to demand things of the value that they supplied.(Wikipedia) Unlike the classical model the Keynes model takes a separate look at supply and demand. The Keynes model states that supply generates income, and that the value of supply is always equal to the value of income. John Keynes also believed that the market was imperfect and could not self-sustain itself. He believed that the government should stimulate demand when the market was failing to do so itself. The classical model on the other hand has more of a laissez-fare approach, and thinks the government should be less involved. They believe that the government can only be a detriment to the economy.
Next, let’s take a look at each theory, and what they believe the best thing to do in a recession. The classical approach to a recession is to let market forces shift the short-run aggregate supply curve rightward and...