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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

“What matters is not whether the economy is self-regulating, but whether prices and wages are flexible and adjust quickly.” Comment.

To determine

Self regulating and the prices and wages flexibility.

Explanation

According to the classical economists, economy is always self-regulating and does not need any intervention of the government to control its activities other than providing the military support. Thus, they demanded the Laissez Faire economy where the economic transactions of the economy are free from the government regulations, tariffs, and interventions. Such an economy that is able to handle and adjust the real variables by itself without any external interventions such as of the government is known as the self regulating economies.

When the self regulating economy and the prices and wages flexibility are considered, the self-regulating economy would be having quick prices and wages adjustment...

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