Adam believes that in the long run all prices are flexible and that any increase in the money supply will lead only to inflation, not to an increase in aggregate output. Because the economy would self-correct to long-run equilibrium output, there is no role for either fiscal or monetary policy. Adam is best described as a:
A) supply-sider.
B) Keynesian.
C) classical economist.
D) monetarist.

Question

Quizplus · Accepted Answer

Adam's belief that all prices are flexible and that the economy self-corrects to long-run equilibrium output is consistent with the classical school of economics. Classical economists believe that markets will ultimately adjust back to equilibrium on their own, without the need for government intervention through fiscal or monetary policies.

Adam Believes That in the Long Run All Prices Are