ABSTRACT
As introduced in the previous chapter, Classical approaches to macroeconomic activities suggest that the private market system has the power to regain market equilibrium and that this system should be left alone. In contrast, Keynesians contend that the national economy will not reach equilibrium or utilize its full capacity if all economic activities are left to the private market system. Keynesians assert that governments should intervene more strongly in the market, especially through increased money injection to boost the aggregate demand in the national economy. Keynesian approaches have dominated the debate over national macroeconomic policies, although new approaches have recently emerged and gained attention. This chapter focuses on the following issues:
Tendency Toward Governmental Intervention
Governmental Intervention: Fiscal Policy and Monetary Policy
Minimizing Governmental Intervention
Other Policy Suggestions
The Hidden Dimension in Macroeconomic Policies: Politics
