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Which of the following is a distinguishing characteristic of the neoclassical view? - Increasing price levels...

Which of the following is a distinguishing characteristic of the neoclassical view?

- Increasing price levels will increase the unemployment rate.

- Wages and real GDP are sticky over time.

- Wages are maintained at original equilibrium.

- Flexibility of wages and prices over time.

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Answer #1

Option (D) Flexibility of wages and prices over time.

Neoclassical theory is focus on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services. By this theory wages and price be flexible not constant or increasing or decreasing over time. In this theory wages and price flexible and adjusted by the market forces. In option A price level increasing but according to neoclassical view its flexible similar option B and C also not correct.

So option (D) is correct answer.

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