What is classical theory of income and employment?

Answer 1

According to the classical economists there is full employment in the economy, every job seeker gets the job in accordance with his capabilities and there is never involuntary unemployment. Moreover, the resources of the economy are fully employed.

The classical economists believed in Lassies fair economy, there should be no government intervention in the economic affairs.

In other world, the classical believed in the free enterprise economy. It is told that the classical economists never presented their model in a refined form. However, the credit goes to modern economists who integrated classical form. However, the credit goes to modern economists who integrated classical ideas. The classical model has two pillars. They are Says law of market and quantity theory of money.

The say's law is concerned with the real sector or production sector of the economy. While quantity theory is linked with the classical views regarding labor market and credit are also presented. All such means the classical model is explained with the help of four markets of the economy: Goods market, credit market, labor market and money market.

A closed private economy where there is no foreign trade and no government, Short run model where population, capital, technology and organizational knowledge remain the same. Anonymous

Answer 2

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