Final answer:
The classical model's assertion that unemployment could not persist due to falling wages to eliminate excess labor supply is false, as various theories and empirical evidence point to wage stickiness preventing rapid wage adjustments, resulting in potential unemployment.
Step-by-step explanation:
According to the classical model, unemployment could not persist for long because wages would fall to eliminate the excess supply of labor. However, this statement is false when considering the concept of sticky wages. In reality, as a result of various theories and empirical evidence on wage rigidity, economists have found that wages tend not to decline rapidly, if at all, even when the economy or a business is underperforming.
The supply-and-demand model of labor markets suggests that the market should move toward an equilibrium wage and quantity; yet, due to wage stickiness, wages do not adjust quickly to reach the equilibrium where the quantity of labor supplied equals the quantity of labor demanded, potentially leading to persistent short-run or long-run unemployment.