|
|
Price Level
|
Wage Level
|
Employment
Level
|
Implications
|
|
Keynesian or
Horizontal
|
Fixed
|
Fixed
|
Flexible
|
Output
depends on changes in employment.
|
|
Intermediate
|
Flexible
|
Fixed
|
Flexible
|
Output
depends upon changes in price level & employment.
|
|
Classical or
vertical
|
Flexible
|
Fixed
|
Fixed
|
Output
depends on changes in price level.
|
Long run AS
·
Time long enough for wages to adjust to the price level.
·
Flexible Wage and Price level.
·
Both offset eachother.
 |
| Demand-pull Inflation |
 |
| Cost-push Inflation |
Putting the information in a chart really helped me to identify the distinctions what Price Level, Wage Level, and Employment Level is fixed and which is flexible when it came to the immediate, horizontal, and classical ranges! Your graphs provided good visuals as well! :)
ReplyDeletePutting the information in a chart really helped me to identify the distinctions what Price Level, Wage Level, and Employment Level is fixed and which is flexible when it came to the immediate, horizontal, and classical ranges! Your graphs provided good visuals as well! :)
ReplyDelete