There are two parts to this question.

2. a) Explain why a decrease in prices was the main reason for the Great Depression. b) The IS/LM model has two equations: MS P =L(r, Y) , Y = C( Y - T) + I( r) + G and 3 unknowns: r, Y, P. As a third restriction some economists have used P=Pbar (prices are fixed) while others have used Y=Ybar (output is fixed). 1. Which of these economists are the Classicals? Which of these economists are the Keynesians? 2. Which of these restrictions describes how the economy behaves in the short-run? Why