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CSS Micro Macro Economics P-I QUESTION #1693
Question 1
Classical economics, with its emphasis on the self-regulating nature of markets and the primacy of production capacity, is most accurately categorised as:
  • Supply-side economics✔️
  • Demand-side economics
  • Both supply-side and demand-side economics
  • None of these
Correct Answer Explanation
Classical economics emphasises supply-side factors as the primary determinants of long-run economic output — production capacity, factor markets, Say's Law ('supply creates its own demand'), flexible wages and prices, and market self-correction. It contrasts with Keynesian economics, which is demand-side (aggregate demand drives output and employment in the short run). Classical economists believe markets naturally return to full employment without government intervention.