Question
The assumption that wages and prices are downwardly flexible in the long run allows for which of the following?
Multiple choice question.
The economy to return to full employment without government intervention
The government and the private sector to affect aggregate demand
The short-run aggregate supply curve to shift to the left
The government to actively intervene during a recession
Multiple choice question.
The economy to return to full employment without government intervention
The government and the private sector to affect aggregate demand
The short-run aggregate supply curve to shift to the left
The government to actively intervene during a recession
Answers
GPT-4o mini
The assumption that wages and prices are downwardly flexible in the long run allows for:
**The economy to return to full employment without government intervention.**
This is because if wages and prices can adjust downward, the economy can self-correct after a recession, restoring full employment over time without the need for government intervention.
**The economy to return to full employment without government intervention.**
This is because if wages and prices can adjust downward, the economy can self-correct after a recession, restoring full employment over time without the need for government intervention.