... market economy is largely 'self correcting', with a strong tendency to return to general equilibrium on its own when it is disturbed by an economic shock or a change in public policy. Classical economists utilize the classical IS-LM model. Keynesians usually agree that prices and wages eventually change as needed to clear markets; however, they believe that in the short run price and wage adjustments are likely to be incomplete. They argue that in the short run, quantities supplied and demanded need not be equal and the economy may remain out of general equilibrium. Keynesians are sceptical about the economy's ability to reach equilibrium rapidly on its own, they are much more inclined than are classical economists to recommend that government act to raise output and employment during recessions and to moderate economic growth during booms - Demand Management. As pointed out above, Keynesians believe that wages and prices do not ...

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