The classical model uses the assumption that
A) all wages and prices are flexible.
B) monopoly is widespread in the economy.
C) interest rates are not flexible.
D) economic markets are fragile and have no tendency to move towards an equilibrium.

Question

Quizplus · Accepted Answer

The classical model assumes that all wages and prices are flexible, meaning that they can adjust quickly to changes in supply and demand. This assumption is central to the classical view that markets will naturally reach an equilibrium without the need for government intervention.

The Classical Model Uses the Assumption That