2016 · Q91
According to the Classical Theory of Employment, deviations from the state of full employment are
General KnowledgeIndian Economy
- Apurely temporary in nature
- Bpermanent in nature
- Cimaginary situations
- Dnormal situations
Explanation
Classical employment theory (Say's Law, wage-price flexibility) holds that the economy self-adjusts to full employment, so any deviation from full employment is purely temporary and corrected by market forces. Permanent or "normal" unemployment belongs to Keynesian, not classical, analysis.