1 In Classical Macroeconomic Theory, (what we studied in chapters 3-8) Output is determined by the supply side(供应方)： supplies of capital,labor technology Changes in demand for goods services (C,I,G)only affect prices,not quantities. Complete price flexibility is a crucial assumption, so classical theory applies in the long run. CHAPTER 9 Introduction to Economic Fluctuations slide 5 slide 5 (what we studied in chapters 3-8) § Output is determined by the supply side(供应方): – supplies of capital, labor – technology § Changes in demand for goods & services (C, I, G ) only affect prices, not quantities. § Complete price flexibility is a crucial assumption, so classical theory applies in the long run. 1