Section 2
Introducing Aggregate Demand and Aggregate Supply
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Boundless Economics
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Explaining Fluctuations in Output
In the short run, output fluctuates with shifts in either aggregate supply or aggregate demand; in the long run, only aggregate supply affects output.
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Classical Theory
Classical theory, the first modern school of economic thought, reoriented economics from individual interests to national interests.
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Keynesian Theory
Keynesian economics states that in the short-run, economic output is substantially influenced by aggregate demand.