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 minimum wage law.

Question

Quizplus · Accepted Answer

Keynesian economists argue that due to various factors such as labor market imperfections, long-term contracts, and social norms, prices and wages are subject to downward "stickiness," meaning they do not adjust quickly or easily in response to changes in supply and demand. This can lead to unemployment and slow economic growth, and Keynesians advocate for government intervention to stimulate demand and employment during economic downturns. They do not necessarily believe that prices and wages should be set by government, nor do they solely rely on minimum wage laws to boost aggregate demand.

Keynesian Economists Argue That