Learning Goal: I’m working on a business discussion question and need an explanation and answer to help me learn.Classical economists believe that prices and quantities adjust to changes in supply and demand and that the economy produces its potential output in the long run. On the contrary, Keynesian economists believe the economy’s equilibrium output in the long run may be less than its potential output due to price and wage rigidities. What is price-wage rigidity? Do you agree with Keynes assessment that wage-price rigidity requires government’s involvement in the markets? Why? Why not?
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