The classical model predicts the real GDP will always be

Question

Quizplus · Accepted Answer

The classical model of economics assumes that the economy always moves towards its full-employment level, where all available resources are being utilized efficiently. Therefore, the predicted real GDP in the classical model is equal to its full-employment level, which is the maximum production the economy is capable of producing without causing inflation. The other options are not true because the classical model assumes that markets are always in equilibrium, and any deviations from this equilibrium are quickly corrected through price adjustments.

The Classical Model Predicts the Real GDP Will Always Be