One of the central tenets of New Classical economics is the belief in: A. The effectiveness of demand-side policies B. The inherent stability of markets and rapid self-adjustment C. The need for constant government intervention D. The elimination of private property rights
Question
One of the central tenets of New Classical economics is the belief in: A. The effectiveness of demand-side policies B. The inherent stability of markets and rapid self-adjustment C. The need for constant government intervention D. The elimination of private property rights
Solution
The correct answer is B. New Classical economics strongly believes in the inherent stability of markets and their ability to adjust rapidly. This school of thought argues that markets are self-regulating and that any deviations from equilibrium are temporary and self-correcting. Therefore, they generally oppose government intervention and believe that the economy can adjust on its own to achieve full employment and stable prices.
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