AP Macroeconomics Question 75: Answer and Explanation

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Question: 75

1. Classical economists generally believe that

I. wages fluctuate quickly

II. Say's law does not hold

III. input and output prices will stay in line with each other

IV. the government should not worry about maintaining aggregate demand at an adequate level

  • A. II and IV only
  • B. I, III, and IV only
  • C. I and IV only
  • D. II and III only
  • E. I, II, and III only

Correct Answer: B


B Classical economists believe in Say's law. They also believe that wages and other input prices fluctuate quickly to stay in line with output prices. For both of these reasons, they feel that the economy is inherently stable and the government does not need to intervene in order to influence aggregate demand.