Long-run unemployment in the classical model is considered to be impossible because
A) the government will intervene to aid the unemployed.
B) job placement and training programs are rampant in the United States.
C) flexible prices and wages keep workers fully employed.
D) the labor supply is horizontal.

Question

Quizplus · Accepted Answer

In the classical model, markets are presumed to always be in equilibrium, and prices and wages are flexible, meaning that any excess supply of labor or unemployment will be quickly resolved in the long run. Therefore, long-run unemployment is considered impossible in the classical model. The other options provided, such as government intervention or job programs, are not necessary in this model because they presume market failure, which is not a characteristic of the classical model.

Long-Run Unemployment in the Classical Model Is Considered to Be