One Tenet of Classical Economics Is That

question 16

Multiple Choice

One tenet of classical economics is that

• A) the role of the government should be limited, since the market will always be self-correcting.
• B) the government should intervene whenever necessary to avoid any unemployment.
• C) wages and prices are "sticky downward."
• D) the government should set a minimum wage slightly above the natural market equilibrium rate.

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Definitions:

Shift in Demand

A change in the demand curve caused by factors other than the price of the good or service, leading to an increase or decrease in demand at every price.

Mass Transit

Public shared transportation systems, such as buses and trains, designed to move large numbers of people efficiently across urban and suburban areas.

Drilled Oil

Petroleum that has been extracted from the earth via drilling operations, a common method for obtaining crude oil.

Inferior Goods

Goods whose demand decreases when consumer income rises, opposite to normal goods, due to their lower quality.