Author Question: What are the two key features of perfectly competitive markets in the Classical Model? What will ... (Read 107 times)

mmm · **on:** Jun 30, 2018

What are the two key features of perfectly competitive markets in the Classical Model?

What will be an ideal response?

Question 2

Explain the difference between macroeconomic variables that are in terms of levels and growth rates. Which important macroeconomic variables are which? Which one is the unemployment rate?

What will be an ideal response?

abctaiwan · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

1 . Perfectly flexible prices and wages
2 . Perfect information on the part of all market participants about market prices

Answer to Question 2

Variables such as GDP and the price level are in terms of levels. Inflation and GDP growth are in terms of growth rates, meaning that they are measured between two different points in time. Unemployment rates are a percentage, but the unemployment rate is not a growth rate because it is not measured over time.