Write an essay(1500words) about macroeconomics,topic is classical model

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Need to analyze the model, combined with knowledge and example of macroeconomics

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Running Head: THE CLASSICAL MODEL OF MICROECONOMICS

The Classical Model of Microeconomics
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THE CLASSICAL MODEL OF MICROECONOMICS

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Introduction

The Classical model holds that economies are free flowing and as a result, wages and
prices freely and automatically adjust themselves to the upward and downward changes in the
economy with regard to demand. Ideally, the model explains that good economic times
automatically push wages up while difficult economic times make the prices of commodities
and wages to come down freely. To achieve these free falls and rise of prices and wages in an
economy, the model assumes that there is always full employment in an economy. This means
that everyone who is willing to work is employed and that the resources present in the
economy are being utilized maximally. The assumption that there will always be full
employment is based on the concept of competition which is argued to be the main influencing
factor for potential output. Ideally, the proponents of the classical model believe that
economies are self-adjusting and do not need external help to adjust or restore in case of
changes such as a recession. This paper describes and evaluates the classical model with
regard to microeconomics.

Microeconomics

Microeconomics is an economic field that deals with the study of firms and
individual’s behaviors especially in making economic decisions such as resource allocation
and how to interact with firms. The objective of microeconomics is to analyze and understand
market systems which establish relative prices for products and allocate scarce resources
among competing uses (Marmer & Yu, 2015). Ideally, these are concepts of a free economy
in which factors which automatically led to price distribution and resource allocations are
evaluated. However, macroeconomics does not limit itself to only understanding market
systems and behaviors and how they interact to create price points and distribute resources
equitably, it also evaluates possible market failures and the causes. Market failure is deemed

THE CLASSICAL MODEL OF MICROECONOMICS

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to have occurred when a market fails to produce efficient outputs. In microeconomics, demand
and supply of both goods, services, and factors of production are crucial. This is because they
are assumed to be the major causes of economic decisions that are made by bot...


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