Classical Economic Theory
Marx
Say's Law
Recessionary vs. Inflationary Gap
How a Gap Closes
100
Classical economic theory was introduced by this person.
Who is Adam Smith?
100
This is Marx's argument against Classical Economic Theory.
What is markets do not automatically adjust to Natural Real GDP.
100
This is Say's Law.
What is supply creates its own demand?
100
This happens when Real GDP is less than Natural GDP.
What is a recessionary gap?
100
An inflationary gap causes wages to change in this direction.
What is an increase in wage rates?
200
This quantity is the ideal quantity of total output.
What is the quantity that will yield full employment of labor?
200
This is the reason why Marx said economies would not automatically adjust to Natural Real GDP.
What is economies would be unstable because of inadequate demand?
200
This causes any consumer savings to be directly offset by business investment.
What is flexible interest rates?
200
This happens when Real GDP is greater than Natural Real GDP.
What is an Inflationary Gap?
200
An increase in wages causes the SRAS to shift in this direction.
What is to the left?
300
This is synonymous with full employment.
What is the natural unemployment rate?
300
According to Marx, this is caused by capitalists paying their workers less than the value of the workers' output.
What is unequal distribution of income?
300
This is a graph of equilibrium in the credit market with all correct labels.
What is see the graph on the board?
300
The unemployment rate is lower than the natural unemployment rate. This is caused by this type of gap.
What is an inflationary gap?
300
An recessionary gap causes wages to change in this direction.
What is wages rates will decrease?
400
The ideal quantity of total output.
What is Natural Real GDP?
400
Marx said that inadequate demand would lead to this problem in the business cycle.
What is increasingly severe downturns?
400
The idea that consumer savings is exactly offset by business investment assumes this.
What is the quantity of both savings and investment is determined by the interest rate?
400
The unemployment rate is higher than the natural unemployment rate. This is caused by this type of gap.
What is a recessionary gap?
400
A decrease in wage rates will cause the SRAS to shift in this direction.
What is to the right?
500
This describes a market under classical economic theory.
What is a self-regulating market?
500
Marx said this would eventually happen to an economy under classical economic theory.
What is the market economy would collapse?
500
This happens when household desire to save increases.
What is the savings curve shifts to the right?
500
This is the graph of long-run equilibrium with all correct labels.
What is see the graph on the board?
500
Classical economic theory follows this policy.
What is Laissez-Faire?
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