A basic assumption of classical economics is:
A) supply creates its own demand.
B) demand creates its own supply.
C) the level of output determines the levels of wages and prices.
D) the level of output shifts to bring wages into equality with prices.

Question

Quizplus · Accepted Answer

Classical economics is based on Say's Law, which posits that "supply creates its own demand." This means that the production of goods and services generates an equivalent amount of demand in the economy, ensuring that everything produced will eventually be consumed.

A Basic Assumption of Classical Economics Is