In the classical theory of Economics— (i) Wage rates are flexible in nature. (ii) Supply creates its…
Flexible wage rates, Say’s law and laissez-faire adjustment to full employment are features of classical macroeconomic theory. In the classical dichotomy, the interest rate…
Choose your answer
In the classical theory of Economics—
(i) Wage rates are flexible in nature.
(ii) Supply creates its own demand.
(iii) There is laissez-faire policy leading to full employment.
(iv) Rate of interest is involved in money theory.
Answer and explanation
Correct answer C
Flexible wage rates, Say’s law and laissez-faire adjustment to full employment are features of classical macroeconomic theory. In the classical dichotomy, the interest rate is determined in the real saving–investment system rather than in money theory.
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West Bengal SET (WB SET)