Question

In the classical model, high unemployment due to a change in aggregate demand can persist for...

In the classical model, high unemployment due to a change in aggregate demand

can persist for an indefinite period of time.
will return to its normal level quickly as wages adjust.
will persist if due to a supply shock but not if due to a demand shock.
never exists because unemployment can never deviate from its normal level.
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Answer #1

The classical economists assume flexibility of wages and price. Hence, when there is high unemployment in the economy due to aggregate demand, wages will adjust themselves.

If AD increases implying higher labour demand meaning higher wages (that is, wages will adjust themselves) which reduces unemployment. Say that a shift in aggregate demand (AD to AD') casus the labour demand to increase from Ld? to Ld?' in the diagram below.

Note that point C is the final point after wage adjustment in the short run.

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