Economics
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Classical Tenents[]

  1. Classical Theory of Employment and Output Determination (real):
  2. Say's Law of Markets (real):
  3. Quantity Theory of Money (nominal): Regardless of the ammount of money that is in the economy there are real underlying factors which determine the real variables.

The Model[]

Output is a funtion of Capital and Labor modified by some exogenously determined variable "A" or "technology."

Assumptions[]

  1. “all economic agents (firms and households) are rational and aim to maximize their profits or utility; furthermore, they do not suffer from money illusion;
  2. all markets are perfectly competitive, so that agents decide how much to buy and sell on the basis of a given set of prices which are perfectly flexible;
  3. all agents have perfect knowledge of market conditions and prices before engaging in trade;
  4. trade only takes place when market-clearing prices have been established in all markets, this being ensured by a fictional Walrasian auctioneer whose presence prevents false trading;
  5. agents have stable expectations.” (Snowden 2005 p.38)

Sources[]

  1. Snowdon, Brian and Howard R. Vane. 2005: Modern Macroeconomics: Its Origins, Development And Current State. Edward Elgar Publishing


This macro-stub needs improving.
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