Question

what are Keynesian bias and Austrian bias?

Answer 1

Keynesian bias states that the overall level of economic activity is determined by the total spending in the economy (aggregate demand). Insufficient aggregate demand leads to high unemployment over long periods. It states that revenue and monetary policies could reduce economic slowdown and depression.

Austria bias focuses on methodological individualism where the choices of individuals ( knowledge, time , expectations etc.) leads to all economic phenomena. They understand economy by analyzing the consequences of individual choices.

The difference between the two lies in the basic approach to solving economic problems. Austrian approach emphasis on the importance of human and social element in controlling, understanding and predicting market conditions while Keynesian approach emphasis the importance of governments in the same.