Based on the Belief That Prices Are Very Flexible,classical Economists

question 148

Multiple Choice

Based on the belief that prices are very flexible,classical economists conclude that

• A) the economy can become stuck at high levels of unemployment for long periods of time.
• B) government intervention in the economy is unnecessary.
• C) the economy will experience wild swings in output and employment.
• D) the best type of economy is centrally planned and run by the state.
• E) government intervention in the economy is very necessary.

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Definitions:

Price

The financial cost of purchasing a product or service.

Apples

Commonly used as an example in economics, representing a tangible good that can be exchanged or consumed.

Bananas

A tropical fruit with a signature yellow peel and soft, sweet flesh, widely consumed around the world and rich in potassium.

Perfect Substitutes

Perfect substitutes are two goods that can be used in place of each other with no loss of utility or preference by consumers.