Ch. 20

• What does the short-run aggregate supply (SRAS) curve represent?

  Output firms supply at any price level
• What do neoclassical economists believe about markets?

  Markets allow the economy to adjust to equilibrium
• What does the monetarist school argue about the economy?

  The economy converges on an equilibrium output level
• What is the natural rate of output?

  Long-run equilibrium level at full employment
• What do Keynesian economists believe about macroeconomic equilibrium?

  The economy can settle below full employment equilibrium
• What are the key concepts associated with the short-run aggregate supply (SRAS) curve?

  • Shows output firms supply at various price levels
  • Reflects short-run production capabilities
• What are the main beliefs of the neoclassical economists and monetarist school?

  • Neoclassical: Markets adjust to equilibrium
  • Monetarist: Economy converges on equilibrium output
• What is the significance of the natural rate of output in economics?

  • Represents long-run equilibrium
  • Corresponds to full employment level
• How do Keynesian economists view macroeconomic equilibrium compared to other schools?

  • Believe equilibrium can be below full employment
  • Contrast with neoclassical and monetarist views