Which of the following statements is NOT consistent with classical economic theory?
A) Supply creates its own demand.
B) Saving always equals investment.
C) Prices and wages can be expected to rise but not fall.
D) None of the statements are consistent with classical economic theory.

Question

Quizplus · Accepted Answer

Classical economic theory posits that markets are self-regulating, with prices and wages adjusting to ensure supply equals demand. This includes the possibility of prices and wages falling in response to excess supply, contrary to statement C, which suggests prices and wages can rise but not fall. Statements A and B are consistent with classical economics; A) "Supply creates its own demand" is Say's Law, and B) "Saving always equals investment" is a principle of classical economics equilibrium.

Which of the Following Statements Is NOT Consistent with Classical