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P.28. The macroeconomy, p. 395.

Different theories:

Classical Theory-all market clear. Say's law: economy will reach to point of no unemployment and equilibrium.

Keynesian view: equilibrium is determined by the aggregate supply and demand, which don't necessarily work in the same way. Economy can be in equilibrium with inflation or unemployment.

The neo-classical school- M. Friedeman, Monetarists (M.Thatcher).

Supply-siders- thought Keynes talked too much about demand, looked at S.

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