This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

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Brief description: Classical economists believe that the economy will settle at full employment equilibrium in the long run. For this reason they believe that in the long run the AS curve is vertical.

Detailed description: The increase in aggregate demand shown in this diagram will simply cause prices to rise in the long run. Classical economists therefore argue that there is no point in the government directly intervening through fiscal policy to manage the economy as they will simply cause inflation.