In the neoclassical view of the macroeconomy, a temporary lack of demand for all goods and services will lead to
A) inflation.
B) a fall in the price level.
C) an expansion.
D) a recession.

Question

Quizplus · Accepted Answer

In the neoclassical view, a temporary lack of demand for all goods and services would lead to a fall in the price level, as prices adjust to restore equilibrium between supply and demand. This adjustment mechanism prevents prolonged periods of economic downturn or recession, differing from Keynesian perspectives that emphasize the potential for demand shortages to cause recessions.

In the Neoclassical View of the Macroeconomy, a Temporary Lack