According to the Classical Theory of Employment, deviations from the state of full employment are
1) purely temporary in nature.
2) permanent in nature
3) imaginary situations
4) normal situations.
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According to the Classical Theory of Employment, deviations from the state of full employment are
1) purely temporary in nature.
2) permanent in nature
3) imaginary situations
4) normal situations.
1) purely temporary in nature.
The classical theory of employment is based on the assumption of the flexibility of wages, interest, and prices. This means that wage rate, interest rate, and price level change in their respective markets according to the forces of demand and supply.
The classical economists had a notion that labour and other resources are utilized completely or fully employed. According to classical economists, over production is a general condition of an economy. Therefore, the condition of unemployment does not occur in the economy.
According to Classical Economists, if the condition of unemployment occurs, it is a temporary or abnormal condition in the economy. In addition, classical economists also propounded that the condition of unemployment occurs due to the interference of government or private organizations in the normal mechanism of market forces.