The aggregate demand and supply model (ADAS) is interpreted as a synthesis of the Keynesian and neoclassical models. It uses the ISLM model, without explaining its nature, to derive aggregate demand (AD). It is combined with an aggregate supply (AS) curve to explain price- inflation and output dynamics. This paper argues that neither the AD nor AS curve is conceptually the same as its microeconomic counterpart and ADAS is not a synthesis. In fact ADASimplies that discretionary policy is necessary and that price changes do not perform their traditional negative feedback function.
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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number
0510001.
Length: 15 pages Date of creation: 01 Oct 2005 Date of revision: Handle: RePEc:wpa:wuwpma:0510001
Note: Type of Document - pdf; pages: 15. Argues that the textbook ADAS model is in need of attention. Contact details of provider: Web page: http://129.3.20.41
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