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.

---

Definitions:

Political Policies

Strategies and decisions made by a government or political party that guide the administration of a country and affect its citizens and economic conditions.

Emerging Market

a market in a country that has some characteristics of a developed market but is not fully developed, often characterized by rapid growth and increased investment opportunity.

Free Trade

An economic policy that allows imports and exports among member countries with little to no tariff barriers, quotas, or prohibitions to foster a more efficient allocation of resources.

Multinational Corporation

A large company that operates and has assets in several countries, beyond its home country.