According to early classical macroeconomics, unemployment
A) can persist for long periods of time, because wages are inflexible.
B) could not prevail for long periods of time, because wages are flexible.
C) can never occur.
D) could not prevail for long, because the government intervenes to eliminate unemployment.

Question

Quizplus · Accepted Answer

Early classical macroeconomics believed that unemployment could not persist for long periods of time because wages were seen as being flexible. This means that when there is excess labor supply, wages will decrease, which will encourage firms to hire more workers. As a result, unemployment should be short-lived.

According to Early Classical Macroeconomics, Unemployment