91Ó°ÊÓ

According to neoclassical economics, supply and demand are the driving factors behind the development, price, and consumption of products and services. It originally debuted in $1900$as a counter-argument to traditional economic ideas.

Say's law is held by neoclassical economists. They are more concerned with decreasing inflation than with cyclical unemployment. They favor a long-term strategy. If they try to rectify cyclical unemployment, inflation will result, worsening the problem.

It should be emphasized that even when the economy reaches maximum economic growth, unemployment exists in the long run. Because the labor market is inherently dynamic, employees continue to enter and exit, resulting in long-term unemployment.

Even if the $AD$curve contacts the $LRAS$curve at the potential GDP, neo-classical economists claim that in the long term, the $AD$curve will intersect the $LRAS$curve. As a result, employment takes care of unemployment.

If $AD$shifts in the long run, it will only affect the price level, not the unemployment rate.