Why Is Persistent Unemployment a Possibility in the Keynesian Model

question 73

Multiple Choice

Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?

• A) The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family.
• B) The Keynesian model assumes that nominal wages are inflexible downward.
• C) The Keynesian model assumes that the level of real GDP is inflexible.
• D) The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns.

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