Self-correcting mechanism of free market systems

Reference no: EM13687324

Through the great recession of 2008 in the US, the study indicates that the demand for unskilled and semi-unskilled workers to hire has declined, however the wage structure paid to the workers hired at all levels did not change significantly through the same period. According Keynesian Macroeconomic theory, this phenomenon is called

1. Self-correcting mechanism of free market systems

2. Classical theory of laissez-faire (leave the market alone)

3. Flexible adjustment of wages and prices by suppliers (employees) and employers

4. Long term contract between employers and employees for wages to be relatively sticky during this great recession.

Reference no: EM13687324

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