Classical Economics And Neoclassical Economics: Approach To Economics

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The three schools of thought that we studied in this course were Neoclassical, Keynesian, and Marxian. Neoclassical economics is a set of solutions to economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand. Keynesian economics is the various theories about how in the short run, and especially during the recessions, economic outputs are strongly influenced by aggregate demand. Marxian economics is the role of labor in the development of an economy, and is critical of the classical approach to wages and productivity. There are many similarities and differences between the three schools of thought all of which played a major role in shaping economic policy at the national and international levels.
Neoclassical economics began in the Seventeenth century and is still used in the present day; it is very big on price regulation and preventing inflation. Neoclassical economics believes in the “invisible hand” and self-regulation, and likes to have a “free
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Neoclassical economists believe the “invisible hand” of the free markets is all we need to achieve equilibrium. Keynesian economists believe although economic agents are rational we believe policymakers can improve economic stability and help attain full employment through various stabilization policies designed to combat a variety of market failures. The three schools of thought have similar but also different views on the economy and how the economy should be handled, which then creates theories and policies and examples of how the economy should look by following each theory. This has helped shape economic policy not only nationally throughout the U.S. but internationally as well. These schools of thought have been used all over the world and have helped determine policies regarding the economy since they were

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