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Classical economists and Keynes

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3. (Evolution of Fiscal Policy) What did classical economists assume about the flexibility of prices, wages, and interest rates? What did this assumption imply about the self-correcting tendencies in an economy in recession? What disagreements did Keynes have with classical economists?

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Classical economist held that price, wages and interest rates will adjust with the changes in money supply. This adjsutment is the key disagreement in the Keynes analysis. Classical economist believe that money is primarily a medium of ...

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This explains the classical economists assume about the flexibility of prices, wages, and interest rates and difference between Keynes

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