Keynesian economics advocates for government intervention, while free-market economics supports self-regulating markets based on supply and demand.
Keynesian economics is based on the idea that markets are imperfect and will not self-regulate. This economic theory suggests that natural market inefficiencies can lead to market losses and unemployment if left unchecked. Keynesian economics advocates for government intervention through fiscal and monetary policies to stabilize the economy.
In contrast, free-market economics believes in self-regulating markets where supply and demand determine prices without government interference. Proponents of free-market economics argue that markets work best when there is adequate competition, information symmetry, resource mobility, and pricing that reflects production costs.
Market failures, such as inadequate competition, information gaps, resource immobility, and externalities, can occur when the conditions for a free market are not met. In such cases, economists consider it a deviation from the optimal functioning of the market.
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