Bring out the salient features of an economy as suggested by classical economists. What are its implications with respect to output, prices, and employment?

Classical economists, including Adam Smith, David Ricardo, and John Stuart Mill, proposed several key features of an economy. Their framework rested on the belief that economies tend to naturally move towards equilibrium without much government intervention, driven by self-regulating market forces. Their analysis emphasized the long-term view of economic behavior, focusing on fundamental aspects like production, distribution, and allocation of resources. Let’s explore the salient features of an economy as outlined by classical economists and the implications these features have for output, prices, and employment.

### Salient Features of an Economy as Suggested by Classical Economists

#### 1. Self-Regulating Economy
Classical economists believed that the economy is self-regulating and inherently stable. According to their theory, market forces such as supply and demand automatically adjust to bring the economy to equilibrium. If there are any imbalances, they are seen as short-term phenomena, quickly corrected through price and wage adjustments. The invisible hand of the market, as articulated by Adam Smith, plays a central role in ensuring that resources are efficiently allocated.

#### 2. Flexible Wages and Prices
A cornerstone of classical theory is the idea that wages and prices are flexible and will adjust to changes in the market. When demand for labor or goods changes, the wage rate and prices will shift accordingly, helping to maintain equilibrium. In the labor market, if there is unemployment, wages will fall until the labor market clears. Similarly, in the goods market, prices adjust to equate supply and demand. This flexibility is key to the classical belief in a self-correcting economy.

#### 3. Full Employment Assumption
Classical economists assumed that the economy operates at or near full employment in the long run. This does not mean that there is never any unemployment, but any unemployment is voluntary or frictional, arising ________ _______ ____ __________ ____ ______ _____ ______.
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