Classical economists (like Adam Smith) hold that a market economy is capable of
ID: 1122535 • Letter: C
Question
Classical economists (like Adam Smith) hold that a market economy is capable of adjusting to deviations away from full-employment because: a. Prices, wages, and interest rates adjust relatively quickly allowing full-employment to be restored. b. Prices, wages, and interest rates remain fixed allowing full-employment to be restored. c. The government reduces its spending allowing full-employment to be restored. d. The Federal Reserve sells U.S. government securities allowing full-employment to be restored.
Explanation / Answer
Question: Classical economists (like Adam Smith) hold that a market economy is capable of adjusting to deviations away from full-employment because, "Prices, wages, and interest rates adjust relatively quickly allowing full-employment to be restored".
=> the correct option is "A".