1 In the short run, increases in the money supply increase the level of output because __________.

1 In the short run, increases in the money supply increase the level of output because __________.

prices and wages are sticky

prices and wages are flexible

interest rates are sticky

demand is fixed

2 A necessary condition for the classical model to work is that __________.

wages and prices are fully flexible

prices, but not wages, are fully flexible

wages and prices are not fully flexible

wages, but not prices, are fully flexible