The classical economists believed in the self-correcting nature of the economic system.What did they believe were the major adjustment mechanisms?
A) inflexible wages, inflexible prices, and flexible interest rates
B) flexible wages, flexible prices, and flexible interest rates
C) sticky wages, sticky prices, and sticky interest rates
D) inflexible interest rates, flexible wages, and flexible prices

Question

The classical economists believed in the self-correcting nature of the economic system.What did they believe were the major adjustment mechanisms?  
A) inflexible wages, inflexible prices, and flexible interest rates 
B) flexible wages, flexible prices, and flexible interest rates 
C) sticky wages, sticky prices, and sticky interest rates 
D) inflexible interest rates, flexible wages, and flexible prices

Quizplus · Accepted Answer

Classical economists believed in the flexible nature of wages, prices, and interest rates to bring about self-correction in the economic system. Inflexible wages and prices can lead to imbalances in the market, whereas flexible wages, prices, and interest rates allow the market to adjust to changes in demand and supply. Hence, option B is the correct choice.

The Classical Economists Believed in the Self-Correcting Nature of the Economic