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An idea on the LAS-SAS-AD Model of neo-classical synthesis
According to the Neo-Classical Synthesis, Keynesian theory is correct in short run while in long run, the classical theory is applicable. For the synthesis, Long run Aggregate Supply (LAS) is taken to be the classical AS curve. Short Run Aggregate Supply Curve (SAS) is taken as the Keynesian AS curve.
Keynesian AD curve is used in the synthesis and LAS SAS and AD are plotted on this same curve.
In the model, Price level is decided by the Keynesian theory both in long run as well as in short run since the Keynesian AD curve is being used. However this price level may not be consistent with quantity theory, that is, the classical AD curve might intersect price at an entirely different point. The quantity theory in level may not hold the neoclassical synthesis in long run or short run but quantity theory in rates must hold the long run.
It is not possible to clearly discuss or elaborate the model without using graphs or diagrammatic representations. They are a necessity to complete this assignment. Our SAS-LAS-AD model of the neo-classical synthesis Homework help can assist you to create a flawless assignment with all these requisite graphical representations of theories.
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