According to Classical Theory

question 18

Multiple Choice

According to classical theory,

• A)Keynes had "neglected to take account of the drag on prosperity which can be exercised by an insufficiency of effective demand."
• B)Macro equilibrium might start out badly and get worse in the absence of government intervention.
• C)Flexible wages and prices allow a laissez faire economy to adjust wages and prices to shifts in aggregate demand.
• D)Business cycles are not relevant and do not occur.

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