The normal condition of a capitalist economy in classical theory is:
A)Underemployment
B)Full employment
C)General unemployment
D)Frictional unemployment

Question

Quizplus · Accepted Answer

Classical economic theory posits that the normal condition of a capitalist economy is full employment, due to the flexibility of prices and wages which adjust to ensure that all resources, including labor, are fully utilized.

The Normal Condition of a Capitalist Economy in Classical Theory