Business, 14.04.2020 18:02, 2024daisjavien

1. Classical economists assumed that wage rates, prices, and interest rates were flexible and would adjust quickly. Consider an extreme case: Suppose classical economists believed wage rates, prices, and interest rates would adjust instantaneously. What would the classical aggregate supply (AS) curve look like? Explain.
2. Give two reasons explaining the possibility that wage rates may not fall.
3. How was Keynes's position different from the classical position with respect to saving and investment?
4. According to some economists, why might business firms pay wage rates above market-clearing levels?

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1. Classical economists assumed that wage rates, prices, and interest rates were flexible and would...