Self-adjustment refers to an economy's ability to return to its long-run equilibrium without the need for external intervention. It occurs through changes in prices, wages, and other market forces.
Related terms
Flexible Prices: In a flexible price system, prices adjust freely based on supply and demand. This allows markets to self-correct and reach equilibrium without the need for interference.
Market Forces: Market forces refer to the factors that influence supply and demand in a market economy. These forces include competition, consumer preferences, technological advancements, and government policies.
Equilibrium: Equilibrium is the state of balance in an economy where there is no tendency for changes or imbalances. It occurs when supply equals demand and all markets are at rest.