Question

Economists often discuss two ways of thinking about the economy – 1) Laissez-faire doctrine (opposes government intervention into the economy beyond a minimum) and 2) Keynesian economics (the government and private businesses both play important roles in maintaining a desired economic system). Which economic viewpoint do you favor, Laissez-faire or Keynesian? Please explain with an example.

Answer 1

Keynesian Economics

laissez-fair policy or the free market economy works under then works under well structured economic system only economic variables are powerful and non-economic factors has no role.

But in reality, the free market economy is theory and the practical implication is difficult due to non-economic factors influence.

Hence Keynesian economics or government regulated economies important in the maintaining the stability in the economy from fluctuation.

1930 depression and Euro crisis 2007 showed the failure of the free market economy and government regulation must in the economic activity through the monetary and fiscal policy.