By the end of this section, you will be able to:Explain the importance of potential GDP in the long runAnalyze the role of flexible pricesInterpret a neoclassical model of aggregate demand and aggregate supplyEvaluate different ways for measuring the speed of macroeconomic adjustment

By the end of this section, you will be able to:Discuss why and how economists measure inflation expectationsAnalyze the impacts of fiscal and monetary policy on aggregate supply and aggregate demandExplain the neoclassical Phillips curve, noting its tradeoff between inflation and unemploymentIdentify clear distinctions between neoclassical economics and Keynesian economics