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Economics 420 – Current Issues in Macroeconomics

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Economics 420 – Current Issues in Macroeconomics

Economics 420 – Current Issues in Macroeconomics                       Prof. Ejindu Ume

Classical Model Summary Assignment                                                       Spring, 2020

Due: Friday, February 21

Write an essay that explains the basic theoretical results of the classical macroeconomic model. Describe the main factors that drive macro activity in the model and explain how these factors lead to the basic classical results. You may find it helpful to think in terms of the diagrams presented in class, but do not include any graphs in your essay. This essay should not discuss policy.

The following list contains concepts that you should cover in your essay. The list is alphabetical. It is your job to organize your analysis of these concepts in a logically coherent way that emphasizes the most important points.                                                                            

Aggregate demand

Potential Output

Demand side

Preferences (or tastes)


Price level

Firm Behavior

Production function

Full employment

Real wage

Interest Rate




Labor productivity

Say’s Law

Labor supply

Supply side

Loanable Funds

Price level




The audience for this assignment is students in the class. That is, you can assume that your audience knows some economics and understands the definition of basic economic concepts, but you should not take for granted that your reader understands every nuance we have discussed. Your objective is to demonstrate that you thoroughly understand the key results of the classical model.

Write clear sentences with an obvious logical structure; strive for efficient, clear, accurate, and logical communication. Eliminate excessively wordy sentences. Watch out for redundancy; make sure that every sentence and phrase adds something of substance. Nonetheless, the writing should flow well. Pay careful attention to verbs and use passive verb constructions sparingly (is, was, to be, has been, etc.). You may choose to use an occasional passive verb, but you should make that choice consciously.

The essay should have a brief introductory paragraph that motivates your reader and establishes the main ideas. The concluding paragraph should return to the main idea, but should add something to the reader’s understanding of the classical model. It should not merely re-state the introduction or mechanistically regurgitate points in the body of the essay. The body paragraphs should have a coherent structure with clear topic sentences.

Here is the biggest challenge. This essay must be less than 500 words. Provide a word count on the paper that you submit. If you do not provide accurate word count you will lose points. No material will be graded beyond 500 words and you will receive a grade deduction for exceeding the limit. To meet the challenge imposed by this limit will require you to edit your essay carefully. If you provide excessive detail on some point, even though your discussion may be correct, you will crowd out the discussion of other, possibly more important, material. You need to set priorities. If you find that your early draft exceeds the length limit look for ways to communicate more efficiently or find some less important details to cut.


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