Classical economics argued that:
A)the supply curve should remain vertical in the long run.
B)the First World War was fought to free Britain from economic ruin.
C)depression was only a short-run, temporary departure from full-employment equilibrium.
D)funeral plots need to be determined by the market.
E)market-based realities cause estate taxes to be too high.

Question

Quizplus · Accepted Answer

Classical economics theorized that the economy will tend towards full-employment equilibrium in the long-run, meaning that any deviations from this state (e.g. depressions, recessions) are only temporary and will eventually correct themselves. This is known as the "invisible hand" principle, which posits that the market will naturally adjust and coordinate itself towards efficiency without the need for government intervention. Therefore, choice C, which reflects this view, is the correct option. Choices A, D, and E do not reflect classical economic theory. Choice B is historically inaccurate as Britain did not fight in the First World War for economic reasons.

Classical Economics Argued That