Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. O The economy cannot sustain production above its potential GDP in the long run. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. O Lower wages will cause an economy-wide increase in the price of a key input.

ENGR.ECONOMIC ANALYSIS
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Which of the following is a TRUE statement in the neoclassical model of AD/AS?
Because wages are flexible, they are unaffected by high rates of unemployment.
The economy cannot sustain production above its potential GDP in the long run.
O A surge in aggregate demand ends up as a rise in output, but does not increase price levels.
Lower wages will cause an economy-wide increase in the price of a key input.
Transcribed Image Text:Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. The economy cannot sustain production above its potential GDP in the long run. O A surge in aggregate demand ends up as a rise in output, but does not increase price levels. Lower wages will cause an economy-wide increase in the price of a key input.
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