The classical microeconomics theory is a common theory in economics that often centers around the market. Most economists believe that classical macroeconomic theory is a good description of the world in the long run, but not in the short run
- In Classical microeconomic theory
, Adam Smith talked about the invisible hand of the market. He explained the reason and when people act out of self-interest, markets often provide goods and services that are demanded by the population.
The key principle of the classical theory is that the economy is simply known to be self‐regulating. It state that the economy is always at or near the natural level of real GDP.
The theory was created by Adam Smith and later on economists, such as David Ricardo.
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