INTERMEDIATE MACROECONOMICS-II
             B.A.(H) Economics, Semester-IV
          Topic-4: Schools of Macroeconomic Thoughts
                   Lecture Notes
         (Ref: Gordon, Macroeconomics, 12th ed. Ch-17.)
               Department of Economics,
             Hansraj College, Delhi University.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               Classical economists believed that the price level was flexible
                                                                                                                                                                                                                                                                                                                                                                                                                                                               and would shift by the amount necessary to eliminate any
                                                                                                                                                                                                                                                                                                                                                                                                                                                               deficiency in aggregate demand.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               In a way they advocated that the economy possessed “strong
                                                                                                                                                                                                                                                                                                                                                                                                                                                               self-correcting properties”, in the form of price-flexibility that
                                                                                                                                                                                                                                                                                                                                                                                                                                                               would automatically correct any tendency for real aggregate
                                                                                                                                                                                                                                                                                                                                                                                                                                                               demand to be too high or too low.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               In the 1930s, the Great Depression brought a decade-long
                                                                                                                                                                                                                                                                                                                                                                                                                                                               economic slump accompanied by double-digit unemployment
                                                                                                                                                                                                                                                                                                                                                                                                                                                               rates.
  INTERMEDIATE MACROECONOMICS-II
  Introduction: Classical and Keynesian Economics
           Prior to the 1930’s, the ideas of classical economists
           dominated macroeconomics.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               In a way they advocated that the economy possessed “strong
                                                                                                                                                                                                                                                                                                                                                                                                                                                               self-correcting properties”, in the form of price-flexibility that
                                                                                                                                                                                                                                                                                                                                                                                                                                                               would automatically correct any tendency for real aggregate
                                                                                                                                                                                                                                                                                                                                                                                                                                                               demand to be too high or too low.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               In the 1930s, the Great Depression brought a decade-long
                                                                                                                                                                                                                                                                                                                                                                                                                                                               economic slump accompanied by double-digit unemployment
                                                                                                                                                                                                                                                                                                                                                                                                                                                               rates.
  INTERMEDIATE MACROECONOMICS-II
  Introduction: Classical and Keynesian Economics
           Prior to the 1930’s, the ideas of classical economists
           dominated macroeconomics.
           Classical economists believed that the price level was flexible
           and would shift by the amount necessary to eliminate any
           deficiency in aggregate demand.
                                                                                                                                                                                                                                                                                                                                                                                                                                                               In the 1930s, the Great Depression brought a decade-long
                                                                                                                                                                                                                                                                                                                                                                                                                                                               economic slump accompanied by double-digit unemployment
                                                                                                                                                                                                                                                                                                                                                                                                                                                               rates.
  INTERMEDIATE MACROECONOMICS-II
  Introduction: Classical and Keynesian Economics
           Prior to the 1930’s, the ideas of classical economists
           dominated macroeconomics.
           Classical economists believed that the price level was flexible
           and would shift by the amount necessary to eliminate any
           deficiency in aggregate demand.
           In a way they advocated that the economy possessed “strong
           self-correcting properties”, in the form of price-flexibility that
           would automatically correct any tendency for real aggregate
           demand to be too high or too low.