Page 61 - DECO402_Macro Economics

Macroeconomic Theory

Notes 9. The change in currency-wage and actual wage in classical model of employment are related
and disproportionate.
10. The classical model of employment is based on full employment.

5.4 Summary

y The classical principle believed that full employment is found without inflation in capitalist
economy. Giving the wage-price flexibility, the automatic power get in economic system
which has nature to continue the full employment and does production on same level. So full
employment is consider a normal situation and deviation is abnormal situation at that level
which are the marching at full employment.

5.5 Keywords

y Law of Market—The rule of market.
y Barter—Exchange of things.

5.6 Review Questions

1. What is the classical principle of employment? Explain.
2. What is the market law of say ? Explain.
3. Write the summary of full employment model.
4. Write a note on the ‘criticism of classical principle, by Keynes.

Answers: Self Assessment

1. classical principle 2. demand 3. thing-exchange 4. (a)
5. (b) 6. (a) 7. True 8. True
9. False 10. False.

5.7 Further Readings

Books 1. Macroeconomics- S.K.Chakravarti, Himalaya Publication House 2010.
2. Macroeconomics- Mohan Shrivastsva, DND Publication 2010.
3. Macroeconomics- Economic growth, Fluctuations and Policy- Robert E. Hall and
Devid H.Paipal, Vaina Books, 2010.

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