Classical Analysis of Aggregate Supply Flashcards Preview

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Flashcards in Classical Analysis of Aggregate Supply Deck (9)
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1
Q

Adam Smith

A

name most commonly associated with classical economic theory

2
Q

key concepts

A
  • the “invisible hand” of the market will always guide an economy back to equilibrium
  • limited government intervention
  • assumes we always fully efficient in using the factors of production
  • theorize that real output levels remain the same regardless of average price levels
3
Q

implications of a vertical LRAS curve

A

economies are always at full efficiency (always in equilibrium)

4
Q

govt. should do which of the following for the economy

A

leave the economy completely alone

5
Q

according to the classicists, the lras curve is only what

A

vertical

6
Q

what happens if you lower the prices of products on the market

A

no impact on output

7
Q

curves

A

similar in nature

8
Q

increase in GDP will result in which of the following for the average price level

A

increase

9
Q

change in APL results in

A

no change in production