One key assumption of the classical model is
A) government spending plays a major role.
B) money illusion cannot fool workers.
C) wages are sticky.
D) prices are sticky.

Question

Quizplus · Accepted Answer

The classical model assumes that workers are not fooled by money illusion, meaning they understand the difference between nominal and real values. This contrasts with the idea of sticky wages or prices and the emphasis on government spending, which are not central assumptions of the classical model.

One Key Assumption of the Classical Model Is