Keynesian economists argue that
A)prices and wages are flexible.
B)prices and wages must be set by government.
C)prices and wages are subject to downward "stickiness."
D)prices and wages depend on the decisions by the Federal Reserve Bank.

Question

Quizplus · Accepted Answer

Keynesian economists believe that prices and wages are subject to downward "stickiness," meaning that they do not adjust quickly to changes in supply and demand. This can lead to prolonged periods of unemployment and economic downturns, as wages and prices remain too high for the market to clear. Keynesian policies often advocate for government intervention to stimulate demand in order to overcome these downward stickiness effects.

Keynesian Economists Argue That