Google
Wednesday 
May 25, 2016 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
Today's Index
Yesterday's Index
294.1

Help us compile the AmosWEB Free Lunch Index. Tell us about your last lunch.

Skipped lunch altogether.
Bought by another.
Ate lunch at home.
Brought lunch from home.
Fast food drive through.
Fast food dine in.
All-you-can eat buffet.
Casual dining with tip.
Fancy upscale with tip.

More About the Index
The Federal Reserve Open Market Committee meets on?

Saturday and/or Sunday.
Monday.
Tuesday.
Wednesday.
Thursday.
Friday.

TECHNOLOGY, AGGREGATE SUPPLY DETERMINANT: One of several specific aggregate supply determinants assumed constant when the short-run and long-run aggregate supply curves are constructed, and that shifts both aggregate supply curves when it changes. An increase in technology causes an increase (rightward shift) of both aggregate supply curves. A decrease in technology causes a decrease (leftward shift) of both aggregate supply curves. Other notable aggregate supply determinants include wages, energy prices, and the capital stock. Technology comes under the resource quality aggregate supply determinant.

Visit the GLOSS*arama


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
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.

<= CIVILIAN LABOR FORCECLASSICAL ECONOMICS =>


Recommended Citation:

CLASSICAL AGGREGATE SUPPLY CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2016. [Accessed: May 25, 2016].


Check Out These Related Terms...

     | classical economics | assumptions, classical economics | Say's law | Keynesian economics | Keynesian aggregate supply curve | flexible prices |


Or For A Little Background...

     | macroeconomics | full employment | efficiency | laissez faire | free enterprise | flexible prices | long-run aggregate supply curve | aggregate supply | aggregate market analysis | natural unemployment | frictional unemployment | structural unemployment | price level | real gross domestic product | competitive market |


And For Further Study...

     | aggregate market shocks | business cycles | aggregate demand increase, long-run aggregate market | aggregate demand decrease, long-run aggregate market | disequilibrium, long-run aggregate market |


Search Again?

Back to the WEB*pedia


APLS

State of the ECONOMY

Private Employer Cost for Employee Compensation
September 2015
$33.37 per hour
Benefits are $10.48 / hour Source: BLS

More Stats

BLACK DISMALAPOD
[What's This?]

Today, you are likely to spend a great deal of time searching for rummage sales seeking to buy either a video camera with stop action features or one of those memory foam pillows. Be on the lookout for vindictive digital clocks with revenge on their minds.
Your Complete Scope

This isn't me! What am I?

The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
"Try not to become a man of success, but rather try to become a man of value. "

-- Albert Einstein

WACM
Weak Axiom of Cost Minimization
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2016 AmosWEB*LLC
Send comments or questions to: WebMaster