a. In the Keynesian theory, the aggregate-demand is based on the Quantity Theory of Money.
b. The short-run aggregate-supply curve is horizontal because economic forces do not affect short-run aggregate supply.
c. Labour demand is the derived demand and downward sloping.
d. Say’s law state, “supply creates its own Demand.
e. In the classical theory, the aggregate-demand is based on the Quantity Theory of Money.
f. The long-run aggregate-supply curve is vertical because economic forces do not affect long-run aggregate supply.
g. Labour demand curve slopes upward and based on work/labour-leisure choice.
h. Say’s law state, “Demand creates its own supply.
i. The Quantity Theory of Money is an identity relating the volume of transactions at current prices to the money supply over the velocity of money.
j. The aggregate-demand curve is upward sloping in the short-run.
k. Labour supply curve is derived from the labour-leisure choice.
l. Long-run aggregate supply curve is vertical
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