A Keynesian model that is consistent with fully flexible wages and prices is based upon the notion of
A) cooperation failures.
B) coordination failures.
C) collaboration failures.
D) decreasing returns to scale.
E) strategic complementarities.

Question

Quizplus · Accepted Answer

A Keynesian model with fully flexible wages and prices can still experience coordination failures, where individuals or firms fail to coordinate their actions, leading to suboptimal economic outcomes despite the flexibility in wages and prices.

A Keynesian Model That Is Consistent with Fully Flexible Wages