In the classical model,flexible prices and wages serve to
A)self-correct the economy guaranteeing a constant price level and a constant level of output.
B)self-correct the economy above to the natural rate of unemployment,and constant price level.
C)ensure that stabilization policy is not required on the part of fiscal authorities.
D)none of the above

Question

Quizplus · Accepted Answer

In the classical model, flexible prices and wages allow the economy to self-correct without the need for government intervention, making stabilization policy unnecessary.

In the Classical Model,flexible Prices and Wages Serve to