Early classical macroeconomics was based largely on the foundation of
A) flexible wages and prices.
B) persistent unemployment.
C) government intervention in the market.
D) Adam Smith's model of imperfectly competitive markets.

Question

Quizplus · Accepted Answer

Early classical macroeconomics, also known as classical economics, emphasized the importance of flexible wages and prices in ensuring that markets can adjust to changes in demand and supply. This was based on the theory of supply and demand, which suggests that markets will naturally reach equilibrium if there is no interference from external factors such as government intervention or persistent unemployment. Adam Smith, one of the most influential classical economists, believed in the invisible hand of the market, which would lead to optimal outcomes if left to its own devices.

Early Classical Macroeconomics Was Based Largely on the Foundation of