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chapter 13 Classical economists believe that wages adjust to clear the labor​ market, so there is...

chapter 13

Classical economists believe that wages adjust to clear the labor​ market, so there is an absence of sticky wages and this results in a vertical aggregate supply curve.

true or false

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Answer #1

The statement given is "TRUE".

In a classical economy wages and prices were flexible both upward and downwards i.e. if prices increased the wages increased and when prices decreased the wages also decreased with it. The economy was always working at full employment level because at a given wage if the individual is not ready to work then he will not be considered as unemployed because he is giving up work voluntarily. There will always a full employment level in the economy giving an inelastic supply curve.

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