In the "non-market-clearing model" the level of final goods sales and unemployment during a recession are
A)the result of interactions between supply and demand.
B)higher than would be the case in a market clearing model.
C)caused by the rapid adjustment of prices and wages.
D)the result of wage and price rigidities.

Question

Quizplus · Accepted Answer

In the non-market-clearing model, the level of final goods sales and unemployment during a recession are the result of wage and price rigidities. Prices and wages do not adjust quickly enough to clear the market, leading to a gap between supply and demand and thus causing unemployment and lower sales.

In the "Non-Market-Clearing Model" the Level of Final Goods Sales