Conceptual

1. What do the aggregate supply and aggregate demand curves describe?

2. explain why the classical supply curve is vertical. What are the mechanisms that ensure con-tinued full employment of labor in the classical case?

3. What relationship is captured by the aggregate supply curve? Can you provide an intuitive justification for it?

4. how does the Keynesian aggregate supply curve differ from the classical one? Is one of these specifications more appropriate than the other? explain, being careful to state the time hori-zon to which your answer applies.