Question

Which of the following is consistent with the classical position on wages and prices? a. Wages...

Which of the following is consistent with the classical position on wages and prices?

a. Wages and prices are inflexible in the downward direction, but not in the upward direction.

b. Prices are inflexible in the downward direction, but wages are flexible.

c. Wages and prices are flexible.

d. Wages are inflexible in the downward direction, but prices are flexible.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Correct option is (c).

As per Classical economics, wages and prices are completely flexible, both upward and downward, and quickly adjust to any economic shocks.

Add a comment
Know the answer?
Add Answer to:
Which of the following is consistent with the classical position on wages and prices? a. Wages...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • What is the classical economics position with respect to (a) wages, (b) prices, and (c) interest...

    What is the classical economics position with respect to (a) wages, (b) prices, and (c) interest rates? What does it mean to say that the economy is in a recessionary gap? In an inflationary gap? In long-run equilibrium? What is the state of the labor market in (a) a recessionary gap, (b) an inflationary gap, (c) long-run equilibrium?

  • QUESTION 26 Which of the following is generally true of nominal wages? In the long run,...

    QUESTION 26 Which of the following is generally true of nominal wages? In the long run, nominal and real wages tend to be equal. Nominal wages are more flexible downward than upward. Nominal wages are more flexible than prices. Sustained and continuous (cyclical) unemployment suggests nominal wages do not fall quickly. Nominal wages do not rise during labor shortages.

  • Which would most likely shift the aggregate supply curve? A change in the prices of _____....

    Which would most likely shift the aggregate supply curve? A change in the prices of _____. domestic products foreign products financial assets resources A decrease in aggregate demand in the short run will reduce _____. both real output and the price level the price level and increase the real domestic output the real domestic output and have no effect on the price level the price level and have no effect on real domestic output The economy's long-run AS curve assumes...

  • A)Classical theory at its crux is the one belief that prices, wages and interest-rates are at equilibrium in the long ru...

    A)Classical theory at its crux is the one belief that prices, wages and interest-rates are at equilibrium in the long run, all on their own. How come they’re all lumped together in this way? Answer: B) Explain which philosophy is supply-sided, and which one is demand-sided. Answer:

  • For each macroeconomic viewpoint, identify whether it is a position held by classical economists, Keynesian economists,...

    For each macroeconomic viewpoint, identify whether it is a position held by classical economists, Keynesian economists, or monetarists. If the viewpoint is shared by more than one group, check all that apply. Viewpoints Expansionary fiscal policy is either an unnecessary or ineffective response to a situation where output is below full employment. A decrease in aggregate demand will lead to only a temporary departure from full employment output. Because prices and wages are flexible, the economy will automatically adjust to...

  • [8] In Keynesian economics the most important factor determining whether the level of economic activity is...

    [8] In Keynesian economics the most important factor determining whether the level of economic activity is growing or shrinking is: A) the multiplier effect. B) government expenditure and tax policies. C) the behavior of nonincome-determined spending. D) the relationship between leakages from and injections into the spending stream. [9] Using the Keynesian approach, if leakages from the spending stream are less than injections, the current level of output is: A) less than the equilibrium level of output, and will increase....

  • QUESTION 12 Which of the following statements about the classical model of the economy is FALSE?...

    QUESTION 12 Which of the following statements about the classical model of the economy is FALSE? O Wages and prices are flexible. The economy will always move toward, or be at, full employment. O Savings and investment will always be equal. Individuals pursue the public interest, not their own self-interest. 0.5 points QUESTION 13 Economic growth will NOT result in deflation if aggregate demand shifts inward to the left as aggregate supply shifts outward to the right inward to the...

  • The classical school of thought, which dominated economics until the 1930's, believed which of the following?...

    The classical school of thought, which dominated economics until the 1930's, believed which of the following? O A Over a relatively short period of time wages and prices would require massive government intervention to bring the economy back to full employment. OB. Over a relatively long period of time wages and prices will never restore themselves to bring back full employment. OC. Over a relatively long period of time wages and prices would adjust and naturally to bring the economy...

  • Question2 0.5 pts Which of the following is an assumption of New Keynesian theory? O prices...

    Question2 0.5 pts Which of the following is an assumption of New Keynesian theory? O prices or wages are sticky (inflexible) money's velocity is stable and predictable technology (supply-side) shocks are the primary cause of business cycles business cycles are caused by a mismatch in timing between savings, investment, and consumption

  • 4)If the economy is at full employment, a rise in net exports causes: A) An increase...

    4)If the economy is at full employment, a rise in net exports causes: A) An increase in RGDP, no change in price in the AD/AS graph. B) Increase in prices in the AD/AS model with no change in the Keynesian model C) Increase in price, no change in RGDP in the Keynesian model D)Increase in RGDP and price level in both models. E) Increases RGDP and prices in Keynesian 5) What describes the difference between Keynesian and classical thinking? A)...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT