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the US economic theories classical and Keynesian. Which one is the US using in the current...

the US economic theories classical and Keynesian. Which one is the US using in the current economy? or is it a mix?

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Answer #1

Classical economic theory cautions state against its participation in economic activities and believes that free market system deliver efficient result. Full employment is general condition.

Conversely, Keynesian theory does not subscribe to classical theory and argues that full employment is not general condition. Thus, government should must make active participation in economic activities to restore equilibrium.

US economy was hit by the economic crisis in 2008 -09, Private economic system could not mend the things that had gone unintended ways. Federal government announced huge packages to restore equilibrium. Thus, gradually, unemployment got reduced from peak of 10 %.  But now government has achieved unemployment target of 4 % or it is condition of full employment.

Thus, government in USA is following Keynesian theory.

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