Google
Sunday 
April 20, 2014 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
Today's Index
Yesterday's Index
146.2

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
Favorite compass direction?

North.
South.
East.
West.

AD VALOREM TAX: A tax that is specified as a percentage of value. Sales, income, and property taxes are three of the more popular ad valorem taxes devised by government. The total ad valorem tax paid increases with the value of what's being taxed.

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, 2000-2014. [Accessed: April 20, 2014].


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



State of the ECONOMY

Retail Sales
February 2014
$427.2 million
Up 0.3% from Jan. 2014 Source: Econ Stats Adm.

More Stats

GREEN LOGIGUIN
[What's This?]

Today, you are likely to spend a great deal of time searching for rummage sales wanting to buy either a coffee table shaped like the state of Florida or storage boxes for your summer clothes. Be on the lookout for mail order catalogs with hidden messages.
Your Complete Scope

This isn't me! What am I?

The Dow Jones family of stock market price indexes began with a simple average of 11 stock prices in 1884.
"The past is a foreign country; they do things differently there."

-- Leslie Poles Hartley, Writer

AAXICO
American Air Export and Import Company
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 ©2000-2014 AmosWEB*LLC
Send comments or questions to: WebMaster