In the classical model,markets clear
A) in the short run
B) every month
C) immediately
D) in the long run
E) as soon as any shock occurs

Question

Quizplus · Accepted Answer

In the classical model, markets clear in the long run. This means that prices and quantities adjust until supply and demand are equal, eliminating any excess supply or demand. This process may take some time, but eventually, markets will reach equilibrium. The classical model assumes that prices are flexible, and that all markets (including labor markets) are competitive, which allows for this long-run adjustment process to take place.

In the Classical Model,markets Clear