Classical vs. Keynesian Economic Thought

The government that governs least governs best

"In the Long Run we're all dead"

Fiscal policy is more effective than monetary policy

Taxes primarily affect people's incentives to save, work, and invest.

Monetary and Fiscal Policies are generally ineffective in managing the economy

Government can and should play a positive role in managing the economy.

Government may not be able to completely control the economy, but it can make it better

Say's law works

Interest rates and Price level changing are the natural fixes to an economy

Fool me once, shame one you.  Fool me twice, shame on me.

Monetary and Fiscal policies have some short-term effects but have little influence in the LR

Recessions and Depressions occur because of too little aggregate demand

Full-employment is the norm and long-run unemployment is voluntary

Lowering taxes or increasing government spending affects AD

Inflation is caused by the government increasing the money supply by more than 3-5% a year