Keynes argued that prices and wages were likely to be inflexible during a recession because:
A)unemployment would be high and firms would have little spare capacity.
B)unemployment would be low and firms would have little spare capacity.
C)unemployment would be high and firms would have substantial spare capacity.
D)unemployment would be low and firms would have substantial spare capacity.
E)unemployment and inflation would be high.

Question

Quizplus · Accepted Answer

Keynes argued that during a recession, unemployment would be high and firms would have substantial spare capacity, leading to inflexible prices and wages as firms and workers are unable to adjust quickly to economic changes.

Keynes Argued That Prices and Wages Were Likely to Be