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According to the classical​ model, if an excess quantity of labor is supplied at a particular...

According to the classical​ model, if an excess quantity of labor is supplied at a particular wage​ level, full employment will be maintained because

A. wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.

B. the government will establish special work programs.

C. the government will step in and stimulate spending.

D. the equilibrium wage rate will rise to stimulate spending.

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Answer #1

A) The classical economist believed labor market is always equilibrium and demand and supply of labor determines the wage rate

  1. Supply of labor increasing function of wage higher wage higher supply of labors
  2. Demand for labors decreasing the function of wages lowers the wager higher the demand for labors by employers.

The classical economist believes that under the assumption of constant population growth, fall in the wages rate increases the employers to hire labors and at existing wage rate.

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