Question 2 2 out of 2 points Use the following graph to answer the questions that follow. The iron law of wages is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker.The theory was first named by Ferdinand Lassalle in the mid-nineteenth century. If the supply is high and there is inadequate demand for it, it is a temporary situation. 2. . The prices for the commodity in question, decrease, to equate the demand and supply and bring the situation back to equilibrium. Classical economists belief that prices and quantities adjust to the changes in the forces of supply and demand and that the economy produces its potential output in the long run. One of the reasons why the Great Depression was so … Keynesian economists believe that: the economy needs help in moving back to full employment. savings leads to investment spending, which increases output. Classical economics places little emphasis on the use of fiscal policy to manage aggregate demand. Classical theory is the basis for Monetarism, which only concentrates on managing the money supply, through monetary policy. Classical economists believe that the commodities markets will also always be in equilibrium, due to flexible prices. crucial to growth; a drain on demand After year 2 of the Great Recession, the United States began to experience _______ in real GDP and _______ in the unemployment rate. Chegg study. Question 1 2 out of 2 points Classical economists believe that when aggregate demand changes, the economy remains at full employment because: Selected Answer: a. prices are very flexible. C) degenerate into pure monopolies in most industries. Chapter 18 quiz Question 1 1 out of 1 points Classical economists believed that: Selected Answer: C. wages and prices were flexible, and as a result, the aggregate supply curve was vertical. Neoclassical economists believe that a … This means that the state should refrain from creating too many rules and regulations. For example, they receive better wages and have a longer average life expectancy. On the contrary, Keynesian economists believe because of price and wage rigidities the economy’s equilibrium output in the long run may be less than its potential output. According to the classical economists, _____.a) people will ... Get solutions . Classical economics is a broad term that refers to the dominant school of thought for economics in the 18th and 19th centuries. Classical economists belief that prices and quantities adjust to the changes in the forces of supply and demand and that the economy produces its potential output in the long run. Find solutions for your homework or get textbooks Search. Textbook Solutions Expert Q&A Study Pack Practice Learn NEW! Classical economists believe that savings is _____, while Keynesian economists believe that savings is _____. Fiscal Policy. On the contrary, Keynesian economists believe because of price and wage rigidities the economy’s equilibrium output in the long run may be less than its potential output. What is price-wage rigid Most consider Scottish economist Adam Smith the … B) achieve full-employment output. Physics Chemistry Statistics Economics Accounting Computer Science. They say that if government intervention is minimal, citizens enjoy a higher standard of living. Understanding Neoclassical Economics . 28) Classical economists believe that a market economy will normally 28) A) eliminate the problem of economic scarcity. B. wages and prices were flexible, and as a result, the aggregate supply curve was vertical. 29) Which of the following changes shifts the long-run aggregate supply curve to the right? Followers of neo-classical economics believe strongly that markets must be free. 29) Classical economists believe that savings is crucial for economic growth because. 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