AP MacroeconomicsEconomic Systems & Schools of Thought
Classical Economics
Classical economics holds that free markets self-correct to full employment in the long run, so government intervention is largely unnecessary.
Associated with Adam Smith and Say's Law ('supply creates its own demand'), it emphasizes flexible wages and prices restoring equilibrium. It corresponds to the vertical long-run aggregate supply curve and contrasts with Keynesian economics.
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AD/AS Model →
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Study module
Aggregate Supply →
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