According to Keynes, involuntary unemployment is possible because of
A)the existence of capital markets.
B)long-term labor contracts and the existence of labor unions.
C)government interference in the market economy.
D)inflation.

Question

Quizplus · Accepted Answer

According to Keynes, involuntary unemployment is possible because of long-term labor contracts and the existence of labor unions. He believed that in a market economy, wages and prices would adjust themselves to equilibrium levels, ensuring full employment. However, he argued that in reality, wages are often fixed in the short run due to contracts or social norms, resulting in a situation where the demand for labor falls short of the available supply, leading to involuntary unemployment. He also identified labor unions as a factor that could prevent wages from adjusting to market levels, leading to unemployment.

According to Keynes, Involuntary Unemployment Is Possible Because of