Why Is Wage and Price Flexibility an Important Assumption of the Classical

question 88

Multiple Choice

Why is wage and price flexibility an important assumption of the classical model?

• A) Flexible wages and prices guarantee that there will be no scarcity.
• B) Flexible wages and prices allow business firms to fool their workers through the money illusion.
• C) Flexible wages and prices allow business firms to fool their customers through the money illusion.
• D) Flexible wages and prices allow markets to reach equilibrium.

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