The assumption of wage and price flexibility lead classical economists to conclude that business cycle fluctuations are short-term in nature.

Question

Quizplus · Accepted Answer

Classical economists believe that in the long run, wages and prices will adjust to maintain full employment and stabilize the economy. Therefore, they view business cycle fluctuations as short-term disturbances that will be corrected over time.

The Assumption of Wage and Price Flexibility Lead Classical Economists