Point out the salient features of classical approach to macroeconomics. Why did it fail to explain the Great Depression? What are the changes suggested by Keynes to the classical approach?

Salient Features of the Classical Approach to Macroeconomics

1. Laissez-Faire Philosophy
   Classical economists believed in minimal government intervention in the economy. They emphasized the efficiency of free markets in allocating resources and achieving equilibrium. Market forces of supply and demand were considered sufficient to regulate economic activities.

2. Say’s Law of Markets
   A central tenet of classical economics was Say's Law, which asserts that "supply creates its own demand." This principle implied that all goods produced in an economy would eventually be purchased, as production inherently generates enough income to buy the output. Consequently, general overproduction or prolonged unemployment was deemed impossible.

3. Full Employment Assumption
   Classical economists assumed that the economy naturally operates at full employment in the long run. Labor markets were thought to be flexible enough to ensure that any unemployment was temporary and voluntary.

4. Price and Wage Flexibility
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