A critical assumption in the classical model is that
A) markets are perfectly competitive in the short run
B) markets clear in the long run
C) markets clear in the short run
D) markets are perfectly competitive in the long run
E) all variables are expressed in nominal terms

Question

Quizplus · Accepted Answer

Markets clear in the long run is a critical assumption in the classical model. This means that the quantity of goods and services supplied equals the quantity demanded at the equilibrium price.

A Critical Assumption in the Classical Model Is That