Assuming the economy is experiencing a recessionary gap, classical economists predict that:
A)wages will remain fixed.
B)monetary policy will sell government securities.
C)higher wages will shift the short-run aggregate supply curve leftward.
D)lower wages will shift the short-run aggregate supply curve rightward.
E)none of these.

Question

Quizplus · Accepted Answer

Classical economists believe that in a recessionary gap, wages will eventually decrease, leading to a rightward shift in the short-run aggregate supply curve, restoring full employment.

Assuming the Economy Is Experiencing a Recessionary Gap, Classical Economists