The correct option for the classical model of the price level.
Answer to Problem 3MCQ
From the available options, the correct option is periods of high inflation.
Explanation of Solution
The classical model of price level would be most applicable during the time period of high inflation because it helps to adjust the
Moreover, this model would not be helpful to control wages, and interests when the economy is in a complete downturn. And, the classical model can rise the wage in the early phase of the depression but after that, it would not provide any assistance.
Therefore, the correct option is b (periods of high inflation) and all other options are incorrect.
Introduction: The classical model of price indicates that the economy is flowing freely and prices can be adjusted according to the ups and downs in the economy such as in good economic conditions, prices will go up.
Chapter 33 Solutions
Krugman's Economics For The Ap® Course
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education