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DEPRESSION: An extended period--a decade or so--of restructuring and institutional change in an economy that's often marked by declining or stagnant growth. During this period, unemployment tends to be higher and inflation lower than a regular, run-of-the-mill recession. Moreover, a depression usually lasts in the range of ten years, often encompassing two or three separate shorter-run business cycles. The most noted depression in the U. S. economy was the Great Depression of the 1930s.
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                           CLASSICAL AGGREGATE SUPPLY CURVE: An aggregate supply curve--a graphical representation of the relation between real production and the price level--that reflects the basic principles of classical economics. The classical aggregate supply curve is vertical at the full-employment level of real production indicating that the quantity of aggregate production is independent of the price level. An alternative is the Keynesian aggregate supply curve. An aggregate supply curve is a graphical representation of the relation between real production and the price level. Classical economics implies that the full-employment level of real production is maintained regardless of the price level, which creates a vertical, or perfectly elastic, aggregate supply curve. This relation results due to flexible prices, which ensure that resources markets maintain equilibrium balance at full employment. Should the price level rise or fall, wages and resource prices adjust to ensure that quantity demanded equals quantity supplied in resource markets.| Classical AS Curve |  |
The exhibit to the right illustrates a classical aggregate supply (AS) curve. The obvious characteristic is that the curve is actually a vertical line. The line is vertical at the full-employment level of real production. Should the price level rise or fall, the economy moves up and down along the curve and real production remains unchanged.The full-employment level of real production corresponds to the natural unemployment rate, also termed the non-accelerating inflation unemployment rate. The measured unemployment rate is not necessarily zero. This rate includes both frictional unemployment and structural unemployment and results if the quantity of labor demanded is equal to the quantity of labor supplied. The classical aggregate supply curve looks a great deal like the long-run aggregate supply curve. Both are vertical at the full-employment level of real production. Both indicate that real production is unaffected by changes in the price level. The reason for the similarity is that the long-run aggregate supply curve is the modern embodiment of the principles of classical economics. For the classical aggregate supply curve, changes in the price level results in changes in wages and resource prices that ensure equality between quantity demanded equals quantity supplied in resource markets. For the long-run aggregate supply curve, changes in the price level results in changes in wages and resource prices that ensure equality between quantity demanded equals quantity supplied in resource markets--in the long run.
Recommended Citation:CLASSICAL AGGREGATE SUPPLY CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: March 4, 2021].
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Today, you are likely to spend a great deal of time at a crowded estate auction seeking to buy either a coffee cup commemorating yesterday or a replacement remote control for your television. Be on the lookout for pencil sharpeners with an attitude.
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A scripophilist is one who collects rare stock and bond certificates, usually from extinct companies.
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"I think luck is the sense to recognize an opportunity and the ability to take advantage of it . The man who can smile at his breaks and grabs his chance gets on." -- Samuel Goldwyn, Film executive
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NAA
National Association of Accountants
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