Q5

Keynes did not disagree with the classical economists' notion that, if left alone, the economy would eventually self-correct inflationary and recessionary gaps. However, this would take more time that the classical economists had believed. That's because prices are sticky. Some markets are not competitive enough for prices to immediately fluctuate to reflect changes in supply and demand. Additionally, labor unions would prevent wage rates from falling, even if there were a surplus of workers in the labor market. However, government intervention is desirable to hasten the closing of inflationary and recessionary gaps because in the long run we're all dead. O True O False