Question

The Classical Theory is based on the assumption that an economy has ______________ or, if nudged away, quickly returns to that condition.a. inflationb. stagflationc. full employmentd. none of the above

Answer 1

c. full employment

Step-by-step explanation:

The classical theory states that the existence of full employment is normal in economy.To classical economists, the diversion of economy from full employment is something abnormal. Classical theory states that unemployment is caused in economy due to involvement of trade union legislation and minimum wage legislation in free market system.

So the answer is c. full employment