Which of the following statements is not true?
A) Classical macroeconomists think that prices and wages adjust rapidly in response to the shocks.
B) Keynesian macroeconomists think that it may take several years for the economy to reach general equilibrium.
C) Classical and Keynesian macroeconomists both agree that money is neutral in the long run.
D) Keynesian macroeconomists argue that money is neutral in the short run but not in the long run.

Question

Quizplus · Accepted Answer

Classical macroeconomists believe that prices and wages adjust rapidly to reach equilibrium in response to shocks, whereas Keynesian macroeconomists believe that these adjustments may take longer. However, both classical and Keynesian economists agree that money is neutral in the long run. Option D is incorrect because Keynesian macroeconomists argue that money is not neutral in the short run, but it becomes neutral in the long run when prices and wages adjust to changes in the money supply.

Which of the Following Statements Is Not True