Keynesian vs. Classical Economics

Classical economics suggests markets are naturally efficient, where supply and demand balance on their own, and economies are self-correcting without government intervention. Keynesian economics, on the other hand, argues that total demand (spending) in the economy drives growth and employment, and during downturns, government intervention — like spending and policies — is necessary to boost demand and pull the economy out of recession. While classical views emphasize free markets and minimal interference, Keynesians see government action as essential, especially during economic slumps, to maintain stability and growth.