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. 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. 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. Classical economics places little emphasis on the use of fiscal policy to manage aggregate demand. The prices for the commodity in question, decrease, to equate the demand and supply and bring the situation back to equilibrium. For example, they receive better wages and have a longer average life expectancy. Most consider Scottish economist Adam Smith the … Classical theory is the basis for Monetarism, which only concentrates on managing the money supply, through monetary policy. The term neoclassical economics was coined in 1900. savings leads to investment spending, which increases output. 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. Followers of neo-classical economics believe strongly that markets must be free. Classical economists believe that savings is crucial for economic growth because. What is price-wage rigid 29) Which of the following changes shifts the long-run aggregate supply curve to the right? According to the classical economists, _____.a) people will ... Get solutions .   Neoclassical economists believe that a … If the supply is high and there is inadequate demand for it, it is a temporary situation. They say that if government intervention is minimal, citizens enjoy a higher standard of living. One of the reasons why the Great Depression was so … 2. Physics Chemistry Statistics Economics Accounting Computer Science. 29) Fiscal Policy. Find solutions for your homework or get textbooks Search. . This means that the state should refrain from creating too many rules and regulations. Keynesian economists believe that: the economy needs help in moving back to full employment. Answers: A. wages and prices were inflexible, and as a result, the aggregate supply curve was vertical. Chegg study. Question 2 2 out of 2 points Use the following graph to answer the questions that follow. B. wages and prices were flexible, and as a result, the aggregate supply curve was vertical. 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. (Keynesian economics is a justification for the ‘New Deal’ programmes of the 1930s.) 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. Classical economists believe that savings is _____, while Keynesian economists believe that savings is _____. Textbook Solutions Expert Q&A Study Pack Practice Learn NEW! C) degenerate into pure monopolies in most industries. B) achieve full-employment output. 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