Keynesian Vs Classical

Question 1

Classical AS

Answer 1

SRAS
LRAS
in the LR, the economy will always be @ full capacity
wages, and other factor rewards, are fully flexible so market will always clear in the long run- no unemployed factors of production

Question 2

Keynesian AS

Answer 2

Just one AS
wages, factor rewards, are sticky downwards so workers will not be willing to accept lower wages ect
markets will not always clear in the long run, so unemployment of resources can persist

2 stages of curve- rising where spare capacity exists, vertical @ full employment