Asked by Ethan Skinner on Mar 10, 2024
Verified
Most economists believe that classical theory describes the world in the short run but not in the long run.
Classical Theory
An economic theory that emphasizes the ideas that free markets can regulate themselves through the laws of supply and demand, positing minimal government intervention.
Short Run
A period in economics where at least one factor of production is fixed and cannot be varied to influence output.
Long Run
A period during which all inputs can be adjusted by firms, as opposed to the short run where some inputs are fixed.
- Achieve an understanding of the explanations for the profiles of the aggregate demand and aggregate supply curves.
- Recognize the role of expectations in economics, especially regarding price levels.
Verified Answer
JD
Jacob DrettwanMar 10, 2024
Final Answer :
False
Explanation :
Most economists believe that classical theory describes the world in the long run but not in the short run, as it assumes prices and wages are flexible and markets clear to allocate resources efficiently over time.
Learning Objectives
- Achieve an understanding of the explanations for the profiles of the aggregate demand and aggregate supply curves.
- Recognize the role of expectations in economics, especially regarding price levels.