According to the classical school of economics, an increase in aggregate demand would NOT lead to an increase in:
A) wages.
B) prices.
C) the full employment level of output.
D) any of the above.

Question

Quizplus · Accepted Answer

The classical school of economics posits that the economy is always at or rapidly adjusts to full employment. Therefore, an increase in aggregate demand would not lead to an increase in the full employment level of output, as it is assumed that the economy is already producing at its full capacity.

According to the Classical School of Economics, an Increase in Aggregate