The price-adjustment mechanism's relevance to the real world has been questioned on the grounds that national output is generally not at the full-employment level and that the velocity of money is not always constant.

Question

Quizplus · Accepted Answer

The statement is true. The price-adjustment mechanism relies on the assumption that the economy is always at full-employment level and that the velocity of money is constant. In reality, however, this is not always the case, and these factors can affect the relevance of the mechanism in the real world.

The Price-Adjustment Mechanism's Relevance to the Real World Has Been