Given the assumptions of the classical model
A) the economy will often experience recessions and expansions.
B) expansion will be the normal condition, but recessions will often be severe and require government intervention.
C) the macroeconomy is erratic, and problems will often be increased over time.
D) the market is a self-correcting mechanism.

Question

Quizplus · Accepted Answer

The assumption of the classical model is that the market is a self-correcting mechanism. Therefore, option D is the correct answer. Options A, B, and C are not consistent with the assumptions of the classical model.

Given the Assumptions of the Classical Model