which characteristic was the fundamental difference between classical and keynesian macroeconomics? the assumed slope of the aggregate demand curve the degree to which people should be willing to trade higher inflation in the future for lower unemployment today the degree of concern about the dilemma of scarcity differences in their assumptions about the flexibility of input prices and inflationary expectations differences in their assumptions about whether people rationally incorporate information about the future into today's decisions

The assumed slope of the short-run aggregate supply curve is characteristic was the fundamental difference between classical and keynesian macroeconomics

Long Run Aggregate Supply (LRAS), according to the conventional conception, is inelastic. This has considerable ramifications. According to the conventional wisdom, supply-side factors like capital stock, labor productivity, and investment levels influence real GDP. According to traditional economists, a long-term increase in aggregate demand (faster than growth in LRAS) can only result in inflation and won't boost real GDP.

The Keynesian perspective on aggregate supply in the long run is different. They contend that the economy may, over time, operate below capacity. Keynesians contend that production can fall below capacity for a number of reasons:

Wages are stuck in a declining trend (labor markets remain sluggish).

multiplier impact that is bad. A decrease in aggregate demand results in others having less income and reducing their spending, which has a negative domino effect.

a paradox of economy. People save more during a recession because they are less confident. Spending less results in a further decline in demand.

The function of aggregate demand in starting and ending a recession is emphasized more, according to Keynesians.

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