Q.

The field of economics that is now called Macroeconomics grew out of the era of the Great Depression, which saw the economy experience a prolonged downturn and persistent high unemployment. Classical economics could not explain these problems because its models assumed all of the following EXCEPT

A. prices are flexible
B. recessions were self correcting
C. wages would adjust in the labor market, thereby eliminating unemployment
D. the government should intervene in the economy
Answer» D. the government should intervene in the economy
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