According to classical economic theory, which of the

Q: Answer-According to classical economic theory, which of the following mechanisms ensures that the economy n...

Classical economists believe that wages and prices are flexible and will adjust to clear markets. If there is unemployment, wages will fall, leading to increased demand for labor and eventually full employment. This is in contrast to Keynesian economics, which emphasizes the role of government intervention to achieve full employment.

following mechanisms ensures that the economy naturally tends towards full employment?

A Government intervention through fiscal and monetary policy.

B The flexibility of wages and prices in response to changes in supply and demand.

C The existence of a minimum wage law.

D The presence of labor unions.

E The availability of unemployment benefits.

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