Which of the following is an argument made by classical economists?

• A. Prices and wages are sticky and do not adjust quickly to changes in demand.
• B. Monopolies are the primary drivers of economic growth.
• C. Government spending is necessary to maintain aggregate demand and prevent recessions.
• D. Markets tend to self-correct and achieve full employment without government intervention.

Answer: (D)

Verified step by step guidance

1. Understand the core beliefs of classical economists, who emphasize that markets are self-regulating and tend to move toward equilibrium without external interference.
2. Recognize that classical economists argue prices and wages are flexible, allowing the economy to adjust quickly to changes in supply and demand.
3. Note that classical theory generally does not support the idea that government spending is necessary to maintain aggregate demand or prevent recessions; instead, it trusts market forces to restore full employment.
4. Identify that classical economists do not focus on monopolies as the primary drivers of economic growth; rather, they emphasize free markets and competition.
5. Conclude that the statement 'Markets tend to self-correct and achieve full employment without government intervention' aligns with classical economic thought.