classical, laissez faire economist argue that inflation and recession?

Question

never occur
may occur but are eliminated by timely action of goverment
may occur but are naturally by mechanism in ternal in the economy
occur naturally and cannot be eliminated

Answer 1

Since you've been given two contradictory answers, let me explain. "May occur but are naturally [eliminated] by mechanism internal in the economy" is the correct answer. "The invisible hand" of supply and demand would take care of the problems of inflation and recession, naturally reversing both trends.

It was consistent with experience from the 1850s in Britain when industry became more important than agriculture in GDP, and in other countries as they joined the industrialising process, down to the 1920s. It was disproved in reality by the Great Depression, when the world economy got stuck in a rut. Keynes set out the theory that explained how, and how to get out of the rut, and in the US President Roosevelt acted on it successfully. That's why the economics that dominated policy from the 1930s until 1980 is called "Keynesian".

Answer 2

The alternative involves Government intervention, which means Government spending when consumer spending decreases (the recession) however to do that the taxes would have to be increased, which is always represented as a negative, because corporations would be taxed more and they own the larger media corporations which unfortunately controls the masses. What should be remembered when Adam Smith first wrote about the idea of laissez faire it was during Spanish mercantilism. 'Laissez faire' needed at the time was the over reaction to the events at the time, Monarchs with absolute power. The sad thing is 'laissez faire' does work, however the market would not naturally support the West's quality of life. If minimum wage dropped below a $1/hour employment would increase and the American markets would likely stabilize despite a large decrease in consumer spending. The alternative to avoid the top 1% owning 75% of the wealth is Government intervention and equality, a concept the top 1% despise.

Answer 3

"may occur but are naturally by mechanism in ternal in the economy" Classical economists restrict the role of govt in the economy and favor the workings or the market as the best way of achieving economic well-being.

Answer 4

never occur