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Q:

According to the Classical Theory of Employment, deviations from the state of full employment are

A) Purely temporary in nature B) permanent in nature  
C) imaginary situations D) normal situations

Answer:   A) Purely temporary in nature



Explanation:

The classical economists believed in the existence of full employment in the economy. To them, full employment was a normal situation and any deviation from this regarded as something abnormal. According to Pigou, the tendency of the economic system is to automatically provide full employment in the labour market when the demand and supply of labour are equal.

Subject: Indian Politics
Exam Prep: Bank Exams
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