A classical model of the economy predicts
A)full employment in the long run.
B)a 15 to 20 percent unemployment level whenever the economy is in equilibrium.
C)the same unemployment rates as the Keynesian model.
D)cyclical changes in the unemployment rate.

Question

Quizplus · Accepted Answer

The classical model assumes that wages and prices are flexible, allowing for the economy to always adjust to full employment in the long run. Therefore, there is no predicted unemployment in the long run in the classical model.

A Classical Model of the Economy Predicts