The demand for labor:
The supply of labor:
The backward-bending part is not normally included in analysis of the classical model.
The aggregate demand curve:
The classical economists were great believers in supply and demand.
They had some trouble explaining the unemployment rate during the Great Depression.
The figure on the right shows why the answers differ for increasing or decreasing the interest rate. The changes are not the infinitesmals of calculus.
More thoughts on limited student loans:
