Classical economists believe that the economy
A) requires activist government intervention to reach its potential level of GDP.
B) is self-regulating and does not require government intervention.
C) can be affected by only monetary policy.
D) is persistently below its potential level of GDP.

Question

Quizplus · Accepted Answer

Classical economists believe in the concept of laissez-faire, which holds that free markets are self-regulating and do not need government intervention. They believe that the economy will automatically move towards its potential level of GDP through the invisible hand of the market, which allocates resources efficiently. Therefore, classical economists do not support activist government intervention in the economy.

Classical Economists Believe That the Economy