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Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. O The economy cannot sustain production above its potential GDP in the long run. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. O Lower wages will cause an economy-wide increase in the price of a key input.

Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. O The economy cannot sustain production above its potential GDP in the long run. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. O Lower wages will cause an economy-wide increase in the price of a key input.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter26: The Neoclassical Perspective
Section: Chapter Questions
Problem 15RQ: When the economy is experiencing a recession, why would a neoclassical economist be unlikely to...
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Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. The economy cannot sustain production above its potential GDP in the long run. O A surge in aggregate demand ends up as a rise in output, but does not increase price levels. Lower wages will cause an economy-wide increase in the price of a key input.
Transcribed Image Text:Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. The economy cannot sustain production above its potential GDP in the long run. O A surge in aggregate demand ends up as a rise in output, but does not increase price levels. Lower wages will cause an economy-wide increase in the price of a key input.
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