Which of the following characterises the classical view of the economy?
A) The economy is inherently unstable.
B) Prices and wages are not flexible.
C) The economy will automatically self-correct to full employment.
D) The economy needs government intervention to adjust to full employment.

Question

Quizplus · Accepted Answer

The classical view of the economy emphasizes the self-correcting forces of the market, such that any deviations from full employment would be automatically corrected in the long run. This is based on the assumption of flexible prices and wages that would adjust to changes in demand and supply, leading to full employment. The classical view does not advocate for government intervention, and instead recommends laissez-faire policies. Option A is incorrect because the classical view assumes that the economy tends towards equilibrium, and any deviations would be temporary. Option B is incorrect because the classical view assumes that prices and wages are flexible, and will adjust to ensure full employment. Option D is incorrect because the classical view advocates for minimal government intervention.

Which of the Following Characterises the Classical View of the Economy