How was Keynes’ approach different from that of his predecessors?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → He examined the working of the economy in its entirety and the interdependence of its sectors
Unlike his predecessors, Keynes examined the working of the economy in its entirety and the interdependence of its sectors.
Option (1) He examined the working of the economy in its entirety and the interdependence of its sectors — Correct. This new approach gave birth to macroeconomics.
Option (2) He held that buyers and sellers following self-interest will take care of the country's welfare — Incorrect. This was Adam Smith’s view.
Option (3) He studied each market on its own, assuming that the rest of the economy remains the same — Incorrect. Studying one sector with the rest held the same describes microeconomics.
Option (4) He held that all labourers who are ready to work will find employment — Incorrect. Full employment of willing workers was the classical tradition that Keynes questioned.
NCERT (2026-27): “1.1 Emergence of Macroeconomics … These events made economists think about the functioning of the economy in a new way. The fact that the economy may have long lasting unemployment had to be theorised about and explained. Keynes’ book was an attempt in this direction. Unlike his predecessors, his approach was to examine the working of the economy in its entirety and examine the interdependence of the different sectors. The subject of macroeconomics was born.” |