Classical economists suggest that unemployment is a short-lived phenomenon because
A) wages adjust quickly to equilibrate quantity of labor demanded with quantity of labor supplied.
B) wages remain unchanged when the quantity of labor demanded exceeds the quantity of labor supplied.
C) wages remain unchanged when the quantity of labor supplied exceeds the quantity of labor demanded.
D) wages tend to rise slowly when the quantity of labor demanded equals the quantity of labor supplied.

Question

Quizplus · Accepted Answer

Classical economists believe that labor markets function similarly to other markets, with wages acting as the price of labor. When there is excess supply of labor (unemployment), wages will naturally fall, making it more attractive for employers to hire workers and reducing the number of unemployed. Conversely, when there is a shortage of labor (low unemployment), wages will rise as employers compete for workers, encouraging more people to enter the labor force and increasing the supply of labor. Therefore, according to classical theory, unemployment is a short-lived phenomenon since wages will adjust to bring the labor market back into equilibrium.

Classical Economists Suggest That Unemployment Is a Short-Lived Phenomenon Because