The idea that the economy will self-correct when confronted with changes in aggregate demand is
associated with new classical economics.

Question

Quizplus · Accepted Answer

New classical economics holds the belief that the economy is self-regulating and will naturally adjust to deviations from its long-term growth path through mechanisms like price and wage flexibility, negating the need for government intervention in response to changes in aggregate demand.

The Idea That the Economy Will Self-Correct When Confronted with Changes