Compare And Contrast Neoclassical And Keynesian Approach

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Further, Keynesian approaches submit that commodity price is relatively inflexible, quantities are relatively flexible while neoclassical model total concurs on the basis that adjustment of market price change swiftly and simply hence quantity does not change. Different from neoclassical approach argue that a change in price and quantity affect the economy relatively low, the Keynes macroeconomic approach states that price shifts are nominal thus bears some effects with the exclusion of price (Screpanti, and Zamagni, 2005). Moreover, the neoclassical model performs better on long-run phenomena where prices have adequate time to adjust while Keynes approach is a short-term phenomenon hence it performs better when prices do not change. In addition, the neoclassical model on maximum utility full employment and economy is excellent while Keynes approaches do not concur thus it is opposite (Screpanti, and Zamagni, 2005). Similarly, a case of neoclassical approach wages, price as well interest rates can adjust to restore full employment equilibrium contrary to Keynes where it shares a view that shortage of aggregate demand for available market goods resulting in demanding shortly declines relatively to aggregate supply, devaluation and widespread unemployment occur (Screpanti, and Zamagni, 2005). The neoclassical approach assumes that market equilibrium freely adjusts accordingly whenever demand and supply aggregate are indirect proportional hence no need for government policies,
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