Which of the following characterizes the classical view of the economy?
A) The economy is inherently unstable.
B) Prices and wages are not flexible.
C) The economy will "self-adjust" to full employment.
D) None of the above.

Question

Quizplus · Accepted Answer

The classical view of the economy holds that the market forces of supply and demand will eventually lead to full employment and a stable economy. This theory emphasizes the importance of laissez-faire policies and believes that prices and wages will adjust to create equilibrium in the market. This principle is often referred to as Say's Law, which states that supply creates its own demand. The classical economists argued that government intervention in the economy, such as through stimulus spending, would only disrupt the natural market forces and lead to inefficiencies.

Which of the Following Characterizes the Classical View of the Economy