Which of the following is NOT an assumption of the classical model?
A) Buyers and sellers react to changes in relative prices.
B) Households want to maximize economic well being.
C) No single buyer or seller of a commodity can affect its price.
D) Wages and prices will move freely in the upward direction but not the downward direction.

Question

Quizplus · Accepted Answer

The assumption that wages and prices move freely in the upward direction but not the downward direction is part of the Keynesian model, not the classical model. The classical model assumes that wages and prices are flexible in both directions.

Which of the Following Is NOT an Assumption of the Classical