The Classical Model builds on the principles developed in microeconomics to explain how equilibrium production and employment might be determined from profit maximizing and utility maximizing behavior.

**
Model Link:
The Classical Model**

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the model links>

Printable PDF **Exercises**

The EconModel presentation of the Classical Model first goes over the various model elements:

- Production
- Labor Demand
- Labor Supply
- Aggregate Supply and Demand
- Loanable Funds

You then trace out movements in the equilibrium for these markets given the following changes:

- Technology Shocks (view screenshot)
- Taxes on Labor Income
- Monetary and Fiscal Policy

**Movie: The Classical Model** (40 seconds)

In addition to illustrating the properties of the Classical Model, these exercises provide the background against which the Keynesian models were developed.

**Classic
Economic Models**

**Macroeconomics**

**Introduction**

Overview of Macro Models

**Models in Chronological Order**

The Classical Model

The Simple Keynesian Model

The Keynesian IS/LM Model

The Mundell-Fleming Model

Real Business Cycles

The IS/MP Model

The Solow Growth Model

**Financial Markets
**
Utility-Based Valuation of Risk

Mean-Variance Analysis:

Risk vs. Expected Return

Fixed Income Securities:

Mortgage/Bond Calculator

Growth Investments:

Present Value Calculator

**Microeconomics**

**Introduction**

Overview of Micro Models

**Supply and Demand**

Basic Supply and Demand

Who Pays a Sales Tax?

The Cobweb Model and

Inventory-Based Pricing

**Theory of the Firm**

Perfect Competition

Monopoly and

Monopolistic Competition

Price Discrimination

The Demand for Labor

**Theory of the Consumer**

Two Goods - Two Prices

Intertemporal Substitution

Labor Supply, Income Taxes,

and Transfer Payments

**Resources**