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1930's economy

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How did the economy of the 1930's affect the views of Classical and Keynesian economists?

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The solution below provides a very detailed and good answer on how the 1930's economy impacted the views of Classical and Keynesian economists.

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In Keynes's theory, government intervention is must to bring the economy of out of a recession. As per Keynes, prices are sticky and if left alone market will take a long time to correct itself. Government intervention is essential in order to enable a fast recovery of the economy. macroeconomic trends can overwhelm the micro-level behavior of individuals. Keynes asserted the importance of aggregate demand for goods as the driving factor of the economy. If the government increases their spending, then the citizens are encouraged to spend more because more money is ...

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