Question

10.14 Since misperceptions theory shows how changes in AD cause changes in output, why is it considered more of a Classical theory than a Keynesian theory? (30 words MAX)

Answer 1

Misperceptions theory as the name name suggests misinterprets the aggregate demand gets affected when prices change .In classical theory too the aggregate demand changes when there is a change in price .They rely on self controling the economies ,on the other hand Keynesian economics theory emphasises that a state economy can be increased only when it tries to grow the demand it's expansive in its nature unlike the misperceptions theory where there will be regulating in its nature .