Question

The classical economists believed that unemployment could not persist because:

A: the government would step in and stimulate the economy by increasing government spending
B: rising prices would make up for any deficiency in spending and make it profitable to rehire workers
C: falling wages would cause businesses to expand employment
D: unemployment benefits would eventually run out, and voluntarily unemployed workers would return to their jobs
E: workers would move abroad, reducing the unemployment rates. ...?

Answer 1

The classical economists believed that unemployment could not persist because B: rising prices would make up for any deficiency in spending and make it profitable to rehire workers. They believed that prices and wages are flexible. Thank you for posting your question. I hope that this answer helped you. Let me know if you need more help.