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AD-AS MODEL: An economic model relating the price level and real production that is used to analyze business cycles, gross domestic product, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The AS-AD model, inspired by the standard market model, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers).
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ASSUMPTIONS, CLASSICAL ECONOMICS Classical economics, especially as directed toward macroeconomics, relies on three key assumptions--flexible prices, Say's law, and saving-investment equality. Flexible prices ensure that markets adjust to equilibrium and eliminate shortages and surpluses. Say's law states that supply creates its own demand and means that enough income is generated by production to purchase the resulting production. The saving-investment equality ensures that any income leaked from consumption into saving is replaced by an equal amount of investment. Although of questionable realism, these three assumptions imply that the economy would operate at full employment.
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GRAY SKITTERY
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Today, you are likely to spend a great deal of time looking for a downtown retail store looking to buy either clothing for your kitty cats or a set of luggage without wheels. Be on the lookout for broken fingernail clippers.
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
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"Defeat is not the worst of failures. Not to have tried is the true failure." -- George E. Woodberry, Author
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