A necessary condition for the classical model to work is that
A) wages and prices are fully flexible.
B) prices, but not wages, are fully flexible.
C) wages and prices are not fully flexible.
D) wages, but not prices, are fully flexible.

Question

Quizplus · Accepted Answer

The classical model assumes that wages and prices are fully flexible, meaning that they can adjust quickly and easily to changes in supply and demand to maintain market equilibrium. If wages and prices are not fully flexible, the classical model may not accurately predict economic outcomes.

A Necessary Condition for the Classical Model to Work Is