Macroeconomics – 2. The Aggregate Supply-Aggregate Demand Model and the Classical-Keynesian Debate

  1. The Classical versus Keynesian controversy is primarily a dispute over what?
  2. State Say’s Law.
  3. What was Thomas Malthus’ critique of Say’s Law?
  4. Use the circular flow diagram to illustrate Say’s Law.
  5. Describe the quantity theory of money.
  6. Explain the two major assumptions of the quantity theory of money.
  7. Describe the Keynesian income adjustment mechanism.
  8. Illustrate equilibrium in the aggregate supply-aggregate demand model.
  9. Explain the three reasons why the .aggregate demand curve slopes downward.
  10. List at least five major reasons why the aggregate demand curve shifts.
  11. Why does the aggregate supply curve slope upward?
  12. List at least five reasons why the aggregate supply curve shifts.
  13. Draw and explain the three ranges of the economy.
  14. Draw and describe the Classical price adjustment mechanism.

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