Which of these did classical economists believe would happen if the economy experienced a downturn?
A) Prices would rise.
B) Interest rates would rise.
C) The economy would self-correct.
D) The government would fix any inefficiencies.

Question

Quizplus · Accepted Answer

Classical economists believed in the idea of a self-correcting economy. They argued that market forces would ultimately lead to full employment and economic growth, even in the face of downturns. This idea is based on the assumption that prices and wages are flexible, so that any imbalance in supply and demand will lead to corresponding changes in prices and wages, eventually restoring equilibrium in the economy. Therefore, classical economists did not rely on government intervention to fix any inefficiencies in the economy, as they believed that such intervention would only lead to further distortions.

Which of These Did Classical Economists Believe Would Happen If