Tài liệu Aggregate supply, the price level, and the speed of adjustment

Introducing prices and the labour market
In discussing equilibrium within the IS-LM model, it has been assumed that
–prices are fixed
–the supply-side of the economy can be ignored.
These assumptions must now be relaxed.

The price level and aggregate demand
The CLASSICAL model of macroeconomics analyses the economy when wages and prices are fully flexible.
The real money supply is the key variable linking the aggregate demand for goods and the price level.
The price level is the average price of all the goods produced in the economy.