According to the classical school of economics, if aggregate demand were to decrease and the economy were to experience some unemployment:
A) the economy would remain at that rate of unemployment indefinitely.
B) prices and wages would fall until the economy returned to full employment.
C) the supply of money would increase until the economy returned to full employment.
D) government purchases of goods and services would increase until the economy returned to full employment.

Question

Quizplus · Accepted Answer

The classical school of economics posits that the economy is self-regulating and that markets will adjust to shifts in aggregate demand through changes in prices and wages. If aggregate demand decreases, resulting in unemployment, classical theory suggests that wages and prices would eventually decrease to a point where full employment is restored, without the need for government intervention.

According to the Classical School of Economics, If Aggregate Demand