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8 Cards in this Set

  • Front
  • Back
In classical economics, AS and AD are ?
AS is vertical and establishes real output

AD is stable and establishes price level
In Keynesian economics, AS and AD are ?
AS is horizantal at less-than-full-employment

AD is unstable (grpah is same as Classical Theory)
Keynesian instability comes from what 2 sourceS?
1) Significant changes in investment spending (AD changes)
2) Supply Shocks (AS changes)
1) Focuses on Money Supply
2) Markets are highly competitive
Monetarists + Government =?
DO NOT MIX. Government influences are responsible for fluctuations in market price/output
Equation of Exchange?
Real-Business-Cycle Theory
A theory that business cycles result from changes in technology and resource availability, which affect productivity and thus increase or decrease long-run aggrerate supply
Coordination Failures
Failure to reach mutually beneficial equilibrium