Final answer:
According to the view that markets self-adjust quickly, during business cycles, prices adjust to bring about equilibrium (option a). This perspective is rooted in classical economic theory, which assumes that market mechanisms efficiently guide supply and demand toward balance without external intervention.
Step-by-step explanation:
The perspective that markets quickly self-adjust stems from classical economic theory, which posits that market mechanisms are generally efficient at finding an equilibrium between supply and demand without the need for external interventions. According to this view, when business cycles occur, it is believed that prices adjust to bring about equilibrium. This adjustment is part of the market's self-correcting nature, with price variations naturally guiding supply and demand towards a balance, where no economic agent has an incentive to change their behavior.
This classical concept is embedded in the notion that markets have the inherent ability to correct themselves in the face of shocks or imbalances. Essentially, variations in price act as the self-regulatory mechanism within markets. When either demand or supply shifts, it may temporarily disrupt the equilibrium, but price flexibility allows the economic forces to guide markets back towards a new equilibrium point. As such, the correct answer to the student's question is A. prices adjust to bring about equilibrium.
Notably, this traditional perspective assumes perfect competition and ignores potential frictions or rigidities that could slow down or prevent this adjustment process. Therefore, the timeline for these adjustments can vary significantly depending on the specific market conditions and the absence or presence of such frictions. It's also essential to understand that even as prices move towards one equilibrium, they may be concurrently influenced by other shifts in demand or supply, leading to a continual process of adjustment.