The Keynesian Aggregate Supply (AS) curve differs from the classical economists' AS curve because Keynes believed that nominal wages were rigid even when there was unemployment. This is in contrast to classical economists who assumed that labor markets worked smoothly to always establish full employment.

In other words, Keynes argued that wages do not adjust quickly enough to clear labor markets, leading to periods of involuntary unemployment. This is reflected in the Keynesian AS curve which is upward sloping, indicating that output (and employment) can change in the short run due to changes in demand.

On the other hand, classical economists believed in the self-correcting nature of markets and thus, their AS curve is vertical, indicating that output is fixed at its full employment level and cannot be changed by shifts in aggregate demand.

So, the correct answer is: "thought that nominal wages were rigid even when there was unemployment."

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The Keynesian Aggregate Supply (AS) curve differs from the classical economists' AS curve because Keynes believed that nominal wages were rigid even when there was unemployment. This is in contrast to classical economists who assumed that labor markets worked smoothly to always establish full employment.

In other words, Keynes argued that wages do not adjust quickly enough to clear labor markets, leading to periods of involuntary unemployment. This is reflected in the Keynesian AS curve which is upward sloping, indicating that output (and employment) can change in the short run due to changes in demand.

On the other hand, classical economists believed in the self-correcting nature of markets and thus, their AS curve is vertical, indicating that output is fixed at its full employment level and cannot be changed by shifts in aggregate demand.

So, the correct answer is: "thought that nominal wages were rigid even when there was unemployment."

Knowee AI · Accepted Answer

The Keynesian Aggregate Supply (AS) curve differs from the classical economists' AS curve because Keynes believed that nominal wages were rigid even when there was unemployment. This is in contrast to classical economists who assumed that labor markets worked smoothly to always establish full employment.

In other words, Keynes argued that wages do not adjust quickly enough to clear labor markets, leading to periods of involuntary unemployment. This is reflected in the Keynesian AS curve which is upward sloping, indicating that output (and employment) can change in the short run due to changes in demand.

On the other hand, classical economists believed in the self-correcting nature of markets and thus, their AS curve is vertical, indicating that output is fixed at its full employment level and cannot be changed by shifts in aggregate demand.

So, the correct answer is: "thought that nominal wages were rigid even when there was unemployment."

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