The Classical View Of Employment And Income - 1523 Words

Through the main economic schools of thought I will explain why reaching full employment may not be possible. I will be going into detail on the classical view of full employment, and the Keynesian view of full employment to help you understand better how each school viewed full employment, and how to achieve it. The classical view gives you a look into the supply side of the economy using Say’s law and the Say’s law flow diagram. Most economists followed the classical view up until the 1930’s. Then John Maynard Keynes influenced the world with the Keynesian Revolution. Keynes believed that demand is what should be the focus instead of supply. He also believed that the economy tends towards equilibrium and not full employment. Both of these schools of thought bring interesting arguments against full employment and how they can achieve it. I feel I must begin with the classical view of employment and income. The classical view of employment and income began in 1776 and lasted all the way up until the early 1930’s. The main belief of the classical economists was that the economy would automatically adjust itself toward full employment. They got their predictions using â€Å"Say’s Law†, which means â€Å"Supply creates its own demand†. In other words that businesses would create enough income to produce the right amount of output. Say’s law explained that the economy would reach full employment if all the people seeking jobs were willing to work for the wage that is equal to theirShow MoreRelatedThe Classical Economists and Keynes: the Debate on Government Policy Activism1189 Words   |  5 Pageseconomist John Maynard Keynes, and the classical economists of his time, whose economic foundations lay in Alfred Marshall’s seminal work, the Principles of Economic. 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