An important assumption of classical economic theory is:
A) savings equals investment in the macroeconomy.
B) supply creates its own demand in the macroeconomy.
C) wages and prices will either increase or decrease to ensure that the economy operates at full employment.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the choices listed are important assumptions of classical economic theory. Classical economics posits that savings will equal investment in the macroeconomy, supply will create its own demand (Say's Law), and wages and prices are flexible, adjusting to ensure the economy operates at full employment.

An Important Assumption of Classical Economic Theory Is