Ranges On The As Curve
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Ranges on the AS Curve December-03-08 8:39 AM
Ranges on the AS Curve AS AD1 Income Price
Classical Range
AD0
Y1 P1 Y0 P0
Intermediate Range Keynesian Range
Full Employment, Full Output
Q0 E0
Q1 E1
OUTPUT EMPLOYMENT
• Keynesian Range: is known as the horizontal section of the aggregate supply curve. It is referred to as the Keynesian section because there is substantial unemployment level occurring at that point. Recall John Maynard Keynes came to fame in the time period of the great depression. • Intermediate range : In the intermediate section of the aggregate supply curve there is a direct relationship between employment and income levels. • Classical range : is known as the vertical section of the aggregate supply curve. In this section, classical economists' concern themselves with the belief that the economy will operate at full employment which will result in full output
Unit 3 - Fiscal Policy Page 1
Ranges on the AS Curve AS AD1 Income Price
Classical Range
AD0
Y1 P1 Y0 P0
Intermediate Range Keynesian Range
Full Employment, Full Output
Q0 E0
Q1 E1
OUTPUT EMPLOYMENT
• Keynesian Range: is known as the horizontal section of the aggregate supply curve. It is referred to as the Keynesian section because there is substantial unemployment level occurring at that point. Recall John Maynard Keynes came to fame in the time period of the great depression. • Intermediate range : In the intermediate section of the aggregate supply curve there is a direct relationship between employment and income levels. • Classical range : is known as the vertical section of the aggregate supply curve. In this section, classical economists' concern themselves with the belief that the economy will operate at full employment which will result in full output
Unit 3 - Fiscal Policy Page 1
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