'Right Back Where We Started From' : From 'the Classics' to Keynes, and Back Again

Market clearing conditions require that the supply of a commodity is greater than or equal to its demand in equilibrium, with the complementary variable being the price of

As the real interest rate rises, aggregate supply (labor effort) increases while aggregate demand (consumption and invest- ment) decreases and the new equilibrium

Firms may be willing to supply more goods at roughly the same price, leading to longer lasting and larger effects of shifts in aggregate demand on output (a version of the

From the preceding analysis, shocks to productivity, aggregate demand, real wages and labour supply seem to be critical factors affecting unemployment, while price shocks

(positive or negative) difference between aggregate demand and supply, then we may express this as the corresponding difference between aggregate investment demand

The hypothesis that, as compared to non-recession years, demand matters more and supply matters less for determining aggregate employment and output at the margin in a recession

A technological change would shift out supply, thereby lowering the price (and  increase the equilibrium quantity). In the long run - with more elastic demand  and supply - the

union power on aggregate demand is small and an be negle ted, output and employment levels. are stri tly monotoni ally de reasing in λ , as under e