Which of the following is NOT an assumption of the classical model?
A) Absence of money illusion.
B) Wages and prices are flexible.
C) Government spending is necessary to achieve economic stability.
D) People are motivated by self-interest.

Question

Quizplus · Accepted Answer

The classical model assumes that the economy is self-regulating and that government intervention is not necessary for achieving economic stability. Therefore, the assumption of government spending being necessary contradicts the classical model.

Which of the Following Is NOT an Assumption of the Classical