The Classical Model


In this chapter, changes in the rate of inflation are finally incorporated into the ISLM–ADAS analysis. This raises the overall level of sophistication of our analysis from Chapter 7 by incorporating a “real world” aggregate supply curve into the ISLM analysis. The stage is also set for an explanation of paradigm shifts between Keynesian and supply-sider models.


Labor Market Interest Rate Monetary Policy Central Bank Real Wage 
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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Rutgers Business SchoolRutgers UniversityNewarkUSA

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