Macroeconomy

CLASSICAL MACROECONOMICS Classical macro frugals is the theory and the classical model of the economists tenner Smith, David Ricardo, John Mills and Jean Baptiste Say. Below the assumptions of the classical macroeconomics be described. 1. Assumptions: ? Competitive markets: Classical theories all make many assumptions almost the markets and their competitiveness.these assumptions ar that all the markets be easy to enter and exit. No monopoly elements are present in the market to prevent newcomers from entering the market or stopping the present ones from quiting the market. Pricess and wages are flexible in both upward and downward directions consort to the demand and supply forces. No single seller or buyer of a harvest-time has sufficient market military group to influence the industry price, nor does any supplier or emptor of labor services have sufficient market creator to influence the market wage rate. Thus all economic agents are price-takers and not price-setters. Because the markets are competitive, a disequilibrium can merely exist for a short period of time which economists expect the short run. The firm can not change roughly of its aspects of operation. So every firm has some fixed inputs trance the pricess and the wages are changing and flexible.

So, if for some reason the product market were experiencing excess demand in some industry, with mensuration demanded greater than quantity supplied, prices would rise until quantity demanded once again equaled quantity supplied. The rise in price returns the market to equilibrium. On the factor side, if there were an excess supply of courseers, wages would aggravate until equilibrium in the labor market was restored and everyone who wanted to work can find a jobwhich is called the full employment. ? Perfect training: In classical theory all economic decision-makers are assumed to be operating by having all the study they needed to make the best decisions. The cost of acquiring information, transactions costs are so low that... If you want to catch up with a full essay, order it on our website: Orderessay

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