Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter9: Classical Macroeconomics And The Self Regulating Economy
Section: Chapter Questions
Problem 12QP
Related questions
Question
If wage rates are not flexible, can the economy be self-regulating? Explain your answer.
Expert Solution
Concept
Classical economics perceives an economy to be a self-regulating system that is capable of correcting its inefficient outcomes as governed by the natural laws of production and exchange, assuming all variables are flexible. Under the classical assumption, the aggregate demand in an economy is always equal to its optimal productive capacity.
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