What are the assumptions of the classical theory of employment in the economy

Q: The argument that the nominal wage is fixed because of​ long-term labour contracts is made by…

A: In economics, different theories and economic thoughts see the society and it's economic activities…

Q: Give your opinion to this statement: The problem of unemployment can only be solved by opening as…

A: Unemployment is a situation in which a person who is willing and able (capable) to work do not find…

Q: According to the Keynesian and New Keynesian theories; a. Show and explain the existence of…

A: As per the Efficiency Wage Theory, firms can work all the more proficiently and turn out to be…

Q: Are the following workers more likely to experience short-term or long-term unemployment? Explain.…

A: a) This scenario will be considered as short-term unemployment as the stone mason has lost his job…

Q: If output is below its natural rate, there will be pressure for wages to __________ because…

A: Unemployment is a situation that occurs when workers want to work but are unable yo find employment,…

Q: Explain why there will always be some unemployment when the labour market is in equilibrium.

A: Unemployment can be defined as a situation in which individuals who are employable and seeking a job…

Q: Assume that there is a discovery of new accessible iron ore deposits off the coast of Newfoundlanc…

A: The demand for labor curve is downward sloping. It shows the number of workers that a firm is…

Q: If technological change increases structural unemployment, why do most governments and economists…

A: All types of technological change can cause substantial changes in the economy and it can cause…

Q: If the economy's full employment rate of output is $6.0 trillion, what will happen to the…

A: As per the table above, equilibrium occurs when Total output = Planned aggregate expenditure The…

Q: How David Ricardo viewed wealth, what constitutes it and how can it be attained? What are the…

A: David Ricardo viewed on wealth Ricardo accepted landowners would in general waste their abundance on…

Q: What do you expect about the unemployment rate and inflation rate when we have the actual level of…

A: Actual level of output refers to the production of goods and services that are actually produced in…

Q: Define the following causes of unemployment: frictional, structural, and cyclical. Which of these…

A: Aside from unemployment theories, a few forms of unemployment are used to model the effects of…

Q: Non-market-clearing theories assume that wages do not instantly to clear the market. Arecessionary…

A: Non-market-clearing theories assume that wages do not instantly changing to clear the market. A…

Q: What is the relationships of interest rate to unemployment under the Keynesian Theory of Wages?

A: Keynes stated that the interest rate changes and try to balance the supply and demand for money in…

Q: An economy currently has a separation rate s = 5% and a job-finding rate f = 74%. Suppose the…

A: The labor market is the market in which the labor demand is equal to the labor supply curve. The…

Q: However, the labor market is a derivative of the goods market in the Keynesian theory (“principle of…

A: According to the Keynesian School of Economics, the most important factor which impacts the real…

Q: According to the Keynesian and New Keynesian theories; b. Is the employment level that you found…

A: Yes, this employment level is equivalent to the class full employment level Shirking's models of…

Q: Question 18 In the AD/AS model, high cyclical unemployment would result in output that is…

A: AS AD model of equilibrium shows how interaction between AD and AS result the determination of price…

Q: In the following question: Pick the right answer and fully explain why this is the correct answer…

A: Frictional unemployment occurs when a person changing from one job to another for different reasons.…

Q: Which of the following policies would Keynesian economists recommend to help lower the rate of…

A: Keynesian Economics originated when the world was engrossed with the idea of "supply creates its own…

Q: Why do economists think the classical dichotomy holds in the long run?

A: The classical dichotomy refers to the classical theory that real variables are independent of…

Q: An economy currently has a separation rate 3 = 5% and a job-finding rate f = 74%. Suppose the…

A: The unemployment rate is the ratio of the number of unemployed people to the labor force. The…

Q: om

A: The job keeper payment policy in turn helps businesses being affected by Covid 19 in order to render…

Q: The NAIRU is More variable than the actual unemployment rate. Constant over time. Less variable than…

A: NAIRU is a non-accelerating inflation rate of unemployment that is the change in unemployment…

Q: analyse the impact that the increasing number of social grants may have on the unemployment rate

A: Social grants are set up to help improve ways of life in the public arena and are given to…

Q: if perfectly competitive labour markets should naturally adjust with changes in capital investments?

A: Keynesian school of economics is the study of macroeconomics that prominently relies on output,…

Q: what is the effect of an increase in unemployment benefits on the equilibrium levels of real wage…

A: Unemployment is defined as the condition where a person who is willing and  able to work is not able…

Q: Identify the point or points for which the following is true: The economy is exhibiting inefficient…

A: PPC is a graphical model that represents all of the different combinations of two goods that can be…

Q: How is the natural rate of unemployment illustrated in an AD/AS model?

A: The natural rate of unemployment depicts the lowest rate of unemployment whereby there is either…

Q: The economist A.W. Phillips published a famous article in 1958 in which he showed a negative…

A: Unemployment adversely affects the purchasing power and demand (hence AD) of consumer, which is not…

Q: Which type of unemployment is experienced by an individual who lost his job due to an economic…

A: Cyclical unemployment occurs due to the business cycle in the economy. When there is a recession,…

Q: Describe the four phases of the classical business cycle   explaining how employment is typically…

A: A business cycle is a wave-like fluctuation in the economy and the wave-like fluctuation will have…

Q: Elaborate discussion of Classical Model of Employment, Output, Wages and Prices

A: The classical model of economics is the traditional view that believes in self-regulating economic…

Q: Describe the full employment macroeconomic equilibrium in the ASAD models?

A: The aggregate demand–aggregate supply model, sometimes known as the AD-AS model, is a macroeconomic…

Q: What is likely to be the impact of efforts towards reducing unemployment on the production potential…

A: So when the economy of any country moves towards the level of full employment it totally removes the…

Q: Using the model for a closed economy, if the nominal wage is $40 and we have a Cobb-Douglas…

A: Cobb douglas production function: Y = KαL1-α α = 0.2 (given) => Y = K0.2L1-0.2 => Y = K0.2L0.8…

Q: A decrease in unemployment (is/is not) a contributing factor to increasing real GDP because…

A: Unemployment refers to those people who are employable and wants to get a job but is unable to get a…

Q: Determination of Equilibrium Level of Employment by The aggregate demand price and aggregate supply…

A:

Q: Describe in detail-The 2 components of the classical model of employment

A: In an economy, classical economics focused on the general behavior of a market and the stabilizing…

Q: Discuss classical theory of unemployment

A: Unemployment is the state in which a person is unable to find employment at the market rate of pay.…

Q: The real business cycle theory believes the supply of labour is inelastic True False

A: Supply is considered inelastic in real business cycle theory.