Answer:
The explanation of this question is given below in the explanation section.
Explanation:
In this question, two different scenerios are given regarding two different economic theory. First, we will know that what is Keynes and Hayek economic theory and then do drag the label to correct situation.
Keynes's economic theory
This theory says the government should increase demand to boost growth. Keynesians believe consumer demand is the primary driving force in an economy. As a result, the theory supports expansionary fiscal policy. Its main tools are government spending on infrastructure, unemployment benefits, and education. A drawback is that overdoing Keynesian policies increases inflation.
Hayek's economic theory
This thoery says that how changing prices relay information that helps people determine their plans is widely regarded as an important milestone achievement in economics
Hayek says that markets will heal themselves and that government should not intervene. Keynes says that governments should intervene in order to soften the blow of a depression/recession.
So, the correct labels for these scenerios are:
Keynes:
A small Caribbean island's economy depends on tourism. However, in recent times, it has seen much less economic activity. Its government decides to let the market correct the situation.
Hayek:
Flour prices have risen in a country where bread is a staple part of the diet. As a result, bread prices have risen tremendously. In an effort to make bread affordable for its citizens, the government has limited how much
bakers can charge for bread.
