You are the adviser to a Benevolent Social Planner. GDP is falling and the economy is in a recession. Recommend a policy and why you chose it (explain the benefits and any potential criticisms of your choice). You may assume what ever policies are already in place (but you must state what these policies are). A good answer would consider the impact in the context of the three macroeconomic models. (Keynesian, Classical, and Solow)
Classical economics, developed in the 18th and 19th centuries, focused on value theory and distribution theory. The value of a product was thought to depend on the costs involved in producing that product. Adjustments in prices would therefore automatically make demand tend to the full employment level. Say's law further expounded on this, stating that recession does not occur because of failure in demand or lack of money. Therefore to recover from a recession, wages should be reduced and improvements in productivity should be made (supply-side focus). ...
Policies for combating recession in the context of Keynesian, Classical, and Solow models.