In the Classical Model, High Unemployment Due to a Change

question 157

Multiple Choice

In the classical model, high unemployment due to a change in aggregate demand

• A) can persist for an indefinite period of time.
• B) will return to its normal level quickly as wages adjust.
• C) will persist if due to a supply shock but not if due to a demand shock.
• D) never exists because unemployment can never deviate from its normal level.