Author Question: The function of money that allows individuals a method to compare the relative value of goods and ... (Read 43 times)

cagreen833 · **on:** Jun 30, 2018

The function of money that allows individuals a method to compare the relative value of goods and services is

A) liquidity. B) medium of exchange.
C) store of value. D) unit of accounting.

Question 2

Why did the classical economists think that large-scale unemployment was not possible in a market economy?

What will be an ideal response?

blazinlyss · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

D

Answer to Question 2

The classical economists accepted Say's law, which indicated that desired expenditures will equal actual expenditures. The act of producing indicates one wants to buy other goods. A surplus or shortage in one market would soon be corrected because prices and wages were assumed to be flexible, and they assumed people could not be fooled by money illusion. They also assumed pure competition and that people were motivated by self-interest. Combining all these ideas, they concluded that full employment would be the norm.