 Competitive markets: Classical theories all make many assumptions about the markets and their competitiveness.these assumptions are that all the markets are easy to enter and exit. No monopoly elements are present in the market to prevent newcomers from entering the market or stopping the present ones from quiting the market. Pricess and wages are flexible in both upward and downward directions according to the demand and supply forces. No single seller or buyer of a product has sufficient market power to influence the industry price, nor does any supplier or purchaser of labor services have sufficient market power to influence the market wage rate. Thus all economic agents are price-takers and not price-setters. Because the markets are competitive, a disequilibrium can only exist for a short period of time which economists call the short run. The firm can not change some of its aspects of operation. So every firm has some fixed inputs while the pricess and the

We must recognize that not every dollar of income earned in the course of production is spent for consumption goods; some part of this income is withheld from consumption, or saved. A part of classical theory provides the mechanism that assures that presumably planned saving will not exceed planned investment. This mechanism is the rate of interest. Classical theory treated saving as a direct function of the rate of interest and investment as an inverse function.

Some common words found in the essay are:
Baptiste Below, DN SNDN, Theory Money, Say's Law, SI Classical, Medium Exchange, D' SD, SAY's Law, Money Traditionally, P1 Classical, wage rate, medium exchange, classical theory, money wage, money supply, aggregate demand, real wage, money wage rate, labor market, level output, price level, wage rate relevance, proportionately money wage, wage rates fall, competition savers investors,
Approximate Word count = 1998
Approximate Pages = 8 (250 words per page double spaced)