Outline two main contributions to economic thought put forward by the Classical Economists:
(i)
(ii)
(17 marks) - Leaving Cert Economics - Question 6 - 2015
Question 6
Outline two main contributions to economic thought put forward by the Classical Economists:
(i)
(ii)
(17 marks)
Worked Solution & Example Answer:Outline two main contributions to economic thought put forward by the Classical Economists:
(i)
(ii)
(17 marks) - Leaving Cert Economics - Question 6 - 2015
Step 1
Efficiency of free markets
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Answer
Classical economists believe that the market offers the most efficient means of allocating resources. They advocate for the workings of the free market to ensure equilibrium would occur. If there is excess demand, prices would rise, thus eliminating excess demand. Conversely, if there is excess supply, prices would fall, eliminating excess supply and allowing the market to reach equilibrium.
Step 2
Self-adjusting mechanism
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Answer
The Classical Economists asserted that if the economy experienced a shock, it would self-correct over time. Output would be restored in the long-run, thereby ensuring full employment levels are achieved.
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