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Classical Economists Believe That the Economy Is Stable and Tends

Question 105

Multiple Choice

Classical economists believe that the economy is stable and tends toward full employment because


A) the government plays an active role in managing the economy.
B) savings is a drain on demand and must be limited.
C) the short run is more important than the long run, and economic policy only works in the short run.
D) prices are flexible and allow the economy to quickly return to full employment.
E) prices are sticky and will not prevent the economy from adjusting to full employment.

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