BBS Second Year: Macro Economics Note
Answer in Both English and Nepali Medium
Describe the Classical Theory of Employment and Output. Explain its criticisms.
Or Describe critical evaluation of Classical Theory of Employment.
Answer in English Medium:
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Adam Smith, J.S Mill, J.B. Say, David Ricardo, Marshall are the proponents of the theory.·
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It is also called the principle of employment and production.
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Based on the recognition of full employment and full competition.
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Recognition of unemployment as a short-term problem.
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Currency should only be considered as a means of exchange.
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Wages will be determined from the interaction of labour’s demand and supply.
J.M. Keynes has made the following Rational Criticisms.
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Unable to solve practical problems.
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In a capitalist economy only small employment is possible and full employment is not possible.
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All income will be spent on consumption and some part will be saved.
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The economy will not be self-adjusted when wages fall sharply and investment yields remain unaffected by interest rates.
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Government intervention is required to remove the uncertainty in the economy from time to time.
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Exchange in the work of currency as well as in savings and speculation.
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Savings claim to be dependent on income and not on interest rates.
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Long-term analysis is unnecessary because people live in the short term and all die in the long term.
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Full competition and full employment not found in real world.
Answer in Nepali Medium
Questions will be asked in English
Describe the Classical Theory of Employment and Output. Explain its criticisms.
Or Describe critical evaluation of Classical Theory of Employment.
Answer in Nepali Medium
Questions will be asked in English
Answer in Nepali Medium
Questions will be asked in English
