Classical Economists Believe That Prices Are Completely Flexible,from Which They

question 78

Multiple Choice

Classical economists believe that prices are completely flexible,from which they conclude that the

• A) economy can become stuck at high levels of unemployment for long periods of time.
• B) economy is self-correcting in response to shocks.
• C) government will need to intervene in the economy frequently.
• D) best type of economy is centrally planned and run by the state.
• E) economy will experience wild swings in output and employment.

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Definitions:

Comparative Advantage

An economic principle that describes the ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Absolute Advantage

The ability of an individual, firm, or country to produce more of a good or service with the same amount of resources as another, making it more efficient.

Piano Tuning

The process of adjusting the tension of the strings in a piano to achieve the desired musical pitch or harmony.

Shoe Polishing

The process of cleaning, conditioning, and applying polish to shoes to enhance their appearance and longevity.