Chapter 9: Classical Macroeconomics and the Self-Regulating Economy: Pro-Class and In-Class Activities Packet NameA.D. Number: Section: Date: Part 2. Matching: Match the Key terms in Column "A" with the definitions in Column "B" by writing the block (upper) case letter of your choice under column "A" and match the definitions in column "B" with the meanings or examples or real world applications in column "C" by writing the small (lower) case letter of your choice under column "B". Column "A" Column "B" Column "C" 1. Say's Law A. The condition in which the Real GDP a. The Gap created because the economy is that the economy is producing is greater under producing goods and services due to than the Natural Real GDP and the lack of aggregate demand in the overall unemployment rate is less than the natural economy and unemployment is high and unemployment rate inflation is low during this period, 2. Recessionary Gap 3. Inflationary Gap B. A public policy of not interfering with b. The law advanced by Jean Babtiste Say, a market activities in the economy. Classical economist who believe in a laissez- faire or free enterprise system and who believe that what ever is produced will be consumed C Supply creates its own demand Production Creates enough demand to The Gap created because the economy is purchase all the goods and services over heated and producing over and above its produced usual full capacity or full employment level because workers have more than one job and they are compensating for the lost output from those who are unemployed but this may D. The condition in which the Real GDP create mid rate of inflation that the economy is producing is less than the Natural Real GDP and the d. A free market economic system that allows the Unemployment rate is greater than the price and the market system to direct and Natural unemployment rate coordinate economic activities 4. Laissez-faire