ABSTRACT
THE STABILITY OF THE MACROECONOMY The stability of the macroeconomy is of concern to households, businesses, and government. Let us examine the classical and Keynesian views concerning this topic.
The Classical View Prior co the Great Depression of the 1930s, a group of economists known as the classical econom ists dominated economic thinking. According to classical economists, the market economy automati-
cally adjusts tO ensure the full employment of its resources. Although an economic downturn might force producers tO decrease their output and lay off workers, the downturn would be short-lived. Because the classical economists believed economic downturns tO be temporary, they argued that the government should not interfere in economic affairs.
