, ECS4861 Assignment 3 (COMPLETE ANSWERS)
2025 - DUE 13 August 2025
MULTIPLE CHOICE,ASSURED EXCELLENCE
Title: Wage and Price Rigidities and Involuntary
Unemployment in Keynesian Economics
Introduction
The persistence of involuntary unemployment has been a
central concern of macroeconomic theory since the
publication of Keynes’s General Theory of Employment,
Interest, and Money in 1936. The statement that “wage and
price rigidities are necessary for Keynesian economics to
explain involuntary unemployment” invites a careful
evaluation of different Keynesian schools of thought. While
some interpretations, particularly in the orthodox and New
Keynesian traditions, regard rigid wages and prices as essential
in explaining why the economy fails to return to full
employment, Keynes’s original analysis does not rely entirely
on such rigidities. This essay examines the role of wage and
price stickiness in Keynes’s General Theory, the orthodox
Keynesian school, and New Keynesian economics, before
offering a critical evaluation of whether these rigidities are
indeed necessary to explain involuntary unemployment.
2025 - DUE 13 August 2025
MULTIPLE CHOICE,ASSURED EXCELLENCE
Title: Wage and Price Rigidities and Involuntary
Unemployment in Keynesian Economics
Introduction
The persistence of involuntary unemployment has been a
central concern of macroeconomic theory since the
publication of Keynes’s General Theory of Employment,
Interest, and Money in 1936. The statement that “wage and
price rigidities are necessary for Keynesian economics to
explain involuntary unemployment” invites a careful
evaluation of different Keynesian schools of thought. While
some interpretations, particularly in the orthodox and New
Keynesian traditions, regard rigid wages and prices as essential
in explaining why the economy fails to return to full
employment, Keynes’s original analysis does not rely entirely
on such rigidities. This essay examines the role of wage and
price stickiness in Keynes’s General Theory, the orthodox
Keynesian school, and New Keynesian economics, before
offering a critical evaluation of whether these rigidities are
indeed necessary to explain involuntary unemployment.
