Which of the Following Assumptions of the Classical Model Is

question 34

Multiple Choice

Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?

• A) Markets never clear in the long run.
• B) The labor market clears.
• C) Prices remain constant and supply and demand adjust.
• D) It does not show how an economy recovers from a recession.
• E) Government intervention is essential to get markets to clear.

---

Definitions:

Corporate Profits

The earnings of a corporation after all expenses have been deducted from revenues, indicating the financial success of the company.

Resource Suppliers

Entities or individuals that provide essential inputs or resources required for production processes across various industries.

Insurable Risk

A risk that meets the criteria for insurance coverage, typically being unforeseeable, accidental, and quantifiable in terms of loss.

Consumer Tastes

Preferences and desires that influence the buying behavior of consumers and demand for products and services.