Classical economists believed that:
A) price flexibility automatically directs market economies to full employment.
B) budget deficits and surpluses were necessary for the control of economic fluctuations.
C) market economies suffer prolonged periods of recessions and depressions.
D) market economies are inherently unstable because of fluctuating aggregate demand.

Question

Quizplus · Accepted Answer

Classical economists believed in the concept of the invisible hand, which suggests that market forces and price flexibility lead to efficient allocation of resources and ultimately full employment. They did not believe in government intervention and thought that any attempt to control economic fluctuations, such as through budget deficits or surpluses, would cause more harm than good. They also believed that market economies would eventually self-correct in the face of recessions and depressions. Therefore, option A accurately reflects classical economic beliefs.

Classical Economists Believed That