According to Keynes,money wages
A)would adjust in the short run in order to maintain full-employment.
B)are inflexible in the short run are cannot guarantee full-employment levels of output.
C)are inflexible and fall as the price level rises.
D)are more flexible downward than upward direction.

Question

Quizplus · Accepted Answer

Keynes believed that money wages are inflexible in the short run, and therefore cannot guarantee full-employment levels of output. While wages may eventually adjust in the long run, there may be a significant period of unemployment in the short run due to this inflexibility. Therefore, Keynes advocated for government intervention through fiscal policy to stimulate demand and reduce unemployment.

According to Keynes,money Wages