Classical economists assumed:
A) there is never full employment.
B) involuntary unemployment exists.
C) the wage rate cannot adjust to equate the quantity of labor demanded with quantity of labor supplied.
D) the wage rate adjusts to maintain labor market equilibrium.

Question

Quizplus · Accepted Answer

Classical economists believed that the wage rate would adjust to maintain labor market equilibrium, meaning that there would be no involuntary unemployment under normal conditions. Options A and B are incorrect because classical economists believed in the possibility of full employment and did not recognize involuntary unemployment as a long-term phenomenon. Option C is incorrect because classical economists believed that the wage rate could adjust to equate the quantity of labor demanded and supplied.

Classical Economists Assumed