Question

Keynesians are skeptical of the classical theory that recessions are periods of increased mismatch between workers jobs because:

A.) workers spend a lot of time searching for work in recessions.
B.) help-wanted advertising rises during recessions.
C.) help-wanted advertising falls during recessions.
D.) people are indifferent between being employed or not.

Answer 1

Keynesians are skeptical of the classical theory of increased job mismatch during recessions. They argue that recessions occur due to insufficient aggregate demand and sticky wages and prices.

Step-by-step explanation:

Keynesians are skeptical of the classical theory that recessions are periods of increased mismatch between workers jobs because:

1. Workers spend a lot of time searching for work in recessions.
2. Help-wanted advertising falls during recessions.
3. People are indifferent between being employed or not.

Keynesian economics argues that recessions occur due to insufficient aggregate demand, which results in firms not hiring enough workers. The sluggish adjustment of the economy to changes in aggregate demand, due to sticky wages and prices, also plays a role. These factors challenge the classical theory of increased job mismatch during recessions and support the Keynesian view.