00:01
In the classical model of the macro, the economy regards the rate of interest to be the equilibrating mechanism between saving and investment.
00:55
They make an assumption that in the long run, the aggregate supply curve is inelastic.
01:33
Therefore, any deviation from full employment will only be temporary.
02:05
On the other hand, the keynesian model regards changes in income to be the equilibrium to be the equilibrating mechanism between saving and investment.
02:54
It places the main role for expansionary fiscal policy or government intervention to overcome recession.
03:01
So when we look at these, the first one, we can't wait for the economy.
03:15
After all, in the long run, we are dead.
03:34
This is the keynesian version.
03:38
And this is because when we say we can't wait for the economy, we're saying we can't wait for the economy to fix itself.
03:44
And that implies government intervention, which is under the keynesian model.
03:51
Next, we have consumer confidence and spending are down.
04:08
The government needs to increase spending...