Discussion on the Keynesian Critique of Classical Macroeconomics

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Classical macroeconomics derives from the ideas of Adam Smith. A general idea of classical economics is that the economy works pretty well on its own. Smith's invisible hand is the driving force that leads self-interested individuals to create a general macroeconomic equilibrium.

This approach to economics seemed to work well until Keynes came along and tried to figure out why the great depression was lasting so long in the United Kingdom. According to classical theory, prices should adjust in a depression to 'undo' ...