The classical economists believed that shifts in the AD and SAS curves offset each other such that the
A)price level rose and output fell unidirectionally given any change in aggregate demand.
B)unemployment level is constant.
C)price level is constant.
D)price level is cyclical.

Question

Quizplus · Accepted Answer

Classical economists believed in the long-term stability of the economy and posited that it operates at or near full employment due to price and wage flexibility. They argued that shifts in aggregate demand (AD) and short-run aggregate supply (SAS) would be offset by adjustments in prices and wages, keeping the unemployment level relatively constant in the long run.

The Classical Economists Believed That Shifts in the AD and SAS