Classical and Keynesian approaches:

Macroeconomics concerns with the study of  aggregate behaviour  in an  economy.  The need for  a  special  bmch  of macmnomics  arises  because what holds  for  the  individual unit may not hold good for  the aggregate. For example,  a  firm may be in a position  to increase  its output  level  in the short  runto meet the increased demand for  its  product. but if all  firms  want  to  increase their output level,  in the short  run  it would not be possible because of  limited availability of resources  (say, labour) unless there are unemployed resources in  the economy. Thus the increase in demand may result in hike in pice without  any increase in output. 

Through  the  intersection of aggregate demand and aggregate supply we obtain  aggregatd output and aggregate price level for the economy.  A change in aggregate demand or aggregate supply would influence the  levels of output  and prices. Economists  differ on the mechanism and speed with which such change takes place in  the economy.  In  this unit we  'will discuss the classical and Keynesian  approaches  to determination of  output and prices  in an  economy. However, we begin  with some  basic concepts  before we deal with  these approaches.