Classical Theory of Employment- Macroeconomics Online Test

The economists associated with the Classical Theory are: I Karl Max II Ackley Gardner III Adam Smith, Ricardo, J.B.Say
I only
II only
III only
I and II
I and III
According to the Classical Theory, Real Wages: I determine the Demand for or Supply of Labour II is obtained by dividing the prevailing Price level by the Money Wages III when falling, increase the Demand for Labour and remove unemployment
I only
II only
III only
I and II
I and III
Which of the following statements hold true according to the Classical Theory of Employment?
Changes in the Interest Rates do not keep the goods market in Equilibrium
Demand for Labour is directly related to the Real Wages
The Savings in the economy must be either turned into Investment or used to procure Capital goods to maintain the level of full employment.
Aggregate Demand is estimated by dividing the Supply of money by its Velocity of circulation
None of the above
Under the Classical Theory, flexibility of Rate of Interest implies: I when Rate of Interest is high, there will be less Investment II when Rate of Interest is low, there will be less Investment III Low Rate of Interest leads to an incentive to save
I only
II only
III only
I and III
II and III
Which Classical Economist gave the equation N = QY/W where N is the level of Employment, QY is that part of National Income which is paid as Wages and W is the Money Wage Rate?
Prof. Pigou
Ricardo
Keynes
Marshall
Karl Marx
Keynes criticized the Classical Theory’s concept of Wage flexibility on the ground that: I Money Wage cut is a double-edged sword II Wages affect the Income of the Labour III Decrease in Money Wage might lead to fall in the labour’s Effective Demand, further leading to Unemployment
I only
II only
III only
I and II
I, II and III
The implications of the Classical Theory of Employment include:
General Unemployment is not possible
Government should follow Laissez Faire (non-interference Policy) in the economy
People spend their entire Income on Consumption and Investment
Savings and Investment are always equal
All of the above
According to the Classical Theory, the types of unemployment existing in the economy are: I Involuntary unemployment II Frictional unemployment III Voluntary unemployment
I only
II only
III only
I and III
II and III
Self- Adjusting Mechanism implies that I If unemployment occurs in the economy, the economic forces automatically adjust themselves to restore full employment equilibrium II External forces exert pressure to adjust the level of unemployment III Equilibrium changes its level many times during the day
I only
II only
III only
I and II
I, II and III
MV=PT (where M is Supply of Money, V is Velocity of circulation of Money, P is the Price level and T is Trade transactions) is the equation showing:
Aggregate Demand is equal to the Aggregate Supply
The Quantity Theory of Money
That if Velocity of circulation of Money and Volume of goods traded remain constant, then there will be direct relation between Price level and Supply of Money
That to maintain full employment, the Money Market must be in equilibrium
All of the above
Description:

The study of Macroeconomics starts with the Classical Theory. The contributors of this Theory laid the foundation of Macroeconomics. Here is a 7-minute short Multiple Choice questions test relating to the Classical Theory of Income and Employment, Full Employment, Assumptions, Determinants, Implications, Criticisms and its related concepts in Macroeconomics. While taking this test, go through all the options very carefully and then, mark your answers.

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