Which of the following statements is (are)correct? In the classical system,
A)aggregate demand is the primary determinate of the natural rate of output and employment.
B)both output and employment are self-adjusting towards the natural rates of output and employment.
C)changes in aggregate supply drives changes in output in the short-run and in the long-run.
D)only output is self-adjusting to the supply-determined full-employment levels.

Question

Quizplus · Accepted Answer

In the classical system, both output and employment are self-adjusting towards the natural rates of output and employment. This means that any deviation from these natural rates will lead to automatic adjustments in the economy. Aggregate demand is not the primary determinate in this system, and changes in aggregate supply only affect short-run output levels. Therefore, options A, C, and D are incorrect.

Which of the Following Statements Is (Are)correct? in the Classical