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Discussion Post 4
: Classical economists belief that prices and quantities adjust to
the changes in the forces of supply and demand and that the
economy produces its potential output in the long run. On the
contrary, Keynesian economists believe because of price and
wage rigidities the economy’s equilibrium output in the long
run may be less than its potential output. 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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