Some economists believe the economy is self-regulating.What does this mean?

Question

Quizplus · Accepted Answer

Economists who believe in self-regulating economy argue that the economy has the ability to adjust itself to changes in demand and supply. This means that if there is a recessionary gap, the economy will automatically increase production to reach the Natural Real GDP. Similarly, if there is an inflationary gap, the economy will automatically decrease production to reach the Natural Real GDP. Therefore, the economy will always produce at Natural Real GDP in the long run, and there will not be persistent recessions or inflation.

Some Economists Believe the Economy Is Self-Regulating