Adam is an economist who believes that in the long run, all prices are flexible and that any increase in the money supply will lead only to inflation, not an increase in aggregate output. Because the economy would self-correct to long-run equilibrium output, there is no role for either fiscal or monetary policy. Adam is best described as a __________.A. supply-side economist B. Keynesian economist C. classical economist D. Monetarist E. rational expectations economist
Business · High School · Thu Feb 04 2021
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Answer: C. classical economist
Classical economists believe in the theory that free markets can regulate themselves. According to this view, in the long run, prices and wages are flexible, and any changes in the money supply only cause inflation without affecting real variables such as output, employment, and consumption. This school of thought suggests that the economy is self-stabilizing and will naturally return to full employment equilibrium over time. Therefore, they argue that there is no need for government intervention through fiscal or monetary policy to manage the economy, as such actions could actually disrupt the natural adjustments of the market.