Compare and contrast the classical and Keynesian theory of Essay

Compare and contrast the Greco-Roman and Keynesian theory of unemployment. Conclude by discussing which argument has been more convincing for you and why - Essay theoretical accountA lower enlist rate depart lead to an increase in the number of workers macrocosmness employed and the vice versa. Unemployment occurs when there is excess bring of workers in the market at a especial(a) wage level. The equilibrium level of the demand and return for tire is established after the unemployed workers tackle lower wages.The full employment level is associated with the equilibrium level in the labour market (Blanchard, 2005). Unemployment occurs when the wage level is above the equilibrium wage hence, leading to a higher labour compared to the quantity being demanded in the market. As a result, unemployment can be classified as the difference between the supply and the demand. The flexibility of the wages has a direct effect on the level of unemployment. A decrease in the demand for a product will lead to a decrease in the demand for labour hence, leading to high levels of unemployment. Consequently, the wage rate will fall but competition between the workers will ca physical exertion them to accept the low wages therefore, leading to a new equilibrium state.The theory explains a situation where low wage rates do not result to higher employment levels cod to the employers are facing low demand for services and goods when the economy is in a recession (Phoa, Focardi and Fabozzi, 2007). The store up demand is the main determinant of the level of economic outputs during recessions. However, it does not have an equal effect on the productive ability off the economy but is influenced by certain determinants such as fanfare and employment rates.According to the Keynesian theory, the changes in aggregate demand have short run make on employment and output unlike in the prices. The unemployment occurs when the aggregate demand function intersects the aggregate supp ly function since the economy cannot experience a full employment level. The theory states that the government can use public investment programs to raise the aggregate