Principles Of Macroeconomics

Classical and Keynesian Debate

[WLOs: 2, 3, 4] [CLOs: 2, 4, 6]

The Week 4 assignment is a group project. Only one student from each group (of the classical school and the Keynesian school) will submit the group assignment (groups are maintained from the Week 3 Classical Economics Versus Keynesian Economics discussion). From 2007 to 2010, the Federal Reserve used many practices unfamiliar to the U.S. central bank. Respond to the following components as an economist representing either the classical or Keynesian school:

  • Evaluate critically, as a classical or Keynesian economist, what caused the 2007 to 2009 financial crisis.
  • Examine the causes that aggravated the financial crisis during the period?
  • Evaluate the actions that the Federal Reserve and the government took during this period. Do you support their actions in both monetary policy and fiscal policy? Why or why not?
  • Recommend an alternative policy or method that could have better resolved the financial crisis if you were a decision maker (of monetary policy or fiscal policy) during the period.
  • Give advice, as a prominent classical or Keynesian economist, to the Federal Reserve and/or federal policy makers to prevent future economic or financial crises.

The Classical and Keynesian Debate paper