Question 1b i Discuss the major difference between classical

Question 1(b)

i. Discuss the major difference between classical and Keynesian economists. Be sure to explain how they differ concerning how quickly equilibrium is restored in the economy as well as what role they see for government action in restoring equilibrium.

ii. What are the two fundamental assumptions in the \"invisible hand\" idea?

thankyou!

Solution

Invisible hand: This is the act of individual by which society gets benefit, but providing such benefit is not intentional.

Two fundamental assumptions are as below:

1. Every individual should work and give labor for his/her own benefit. There is no thinking of promoting society behind.

2. People stay in the society. Therefore, their work must affect the society as a whole.