Buyers and sellers neglect the external effects of their actions when deciding how much to demand or supply

Why is wage and price flexibility an important assumption of the classical model?

A) Flexible wages and prices guarantee that there will be no scarcity. B) Flexible wages and prices allow business firms to fool their workers through the money illusion. C) Flexible wages and prices allow business firms to fool their customers through the money illusion. D) Flexible wages and prices allow markets to reach equilibrium.

A binding minimum wage creates unemployment

a. True b. False Indicate whether the statement is true or false