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If the IS-LM model is modified by including perfectly flexible wages and prices, the following general results are obtained: 1) Full employment...

If the IS-LM model is modified by including perfectly flexible wages and prices, the following general results are obtained:

1) Full employment equilibrium is achievable.

2) The keynes effect helps to ensure that full employment is reached

3) There is no involuntary unemployment

4) The demand determined level of employment will be at the full employment level

5)all of the above

please asnwer your

Top Answer

2) The keynes effect helps... View the full answer

4 comments
  • please explain
    • unizulu
    • Apr 06, 2016 at 9:50am
  • this is because keynes explains that under full employment in the economy investments always exceeds the savings.
    • munyalokennedy
    • Apr 06, 2016 at 9:52am
  • Thank you
    • unizulu
    • Apr 06, 2016 at 9:58am
  • you are most welcome for more papers.
    • munyalokennedy
    • Apr 06, 2016 at 10:00am

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