Term
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Definition
| Model of self-adjusting economy with markets that are flexible enough to keep the economy at full employment |
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Term
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Definition
| Prices, wages, and interest rates are fixed so that markets will not always "clear" or reach equilibrium |
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Term
| Aggregate Demand/Aggregate Supply Model |
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Definition
| The price level adjusts until desired spending it equal to desired output |
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Term
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Definition
| Real wages are flexible enough so that the market is always at equilibrium. If the quantity of labor demanded is always equal to the quantity of labor supplied, then there is no involuntary unemployment |
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