According to the Classical Model, Unemployment

question 151

Multiple Choice

According to the Classical model, unemployment

• A) could not persist because wages would rise to eliminate the excess supply of labor.
• B) could not persist because wages would fall to eliminate the excess supply of labor.
• C) could be eliminated through fiscal and monetary policies.
• D) could be eliminated only through government intervention.

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Definitions:

Private Goods Consumption

Involves the use of goods that are excludable and rivalrous, meaning their consumption by one individual prevents another from consuming the same good.

Pareto Optimal

A condition where the distribution of resources cannot be changed without negatively impacting at least one person.

Private Goods Consumption

The act of consuming goods that are excludable and rivalrous in nature, meaning they can only be owned or consumed by one party and consumption by one person prevents consumption by another.

Pareto Optimal

A state of allocation of resources from which it is impossible to make any one individual better off without making at least one individual worse off.