Classical Economics

Which of the following is NOT an assumption of Classical Economics?

• Prices are flexible

• Supply creates demand

• Savings = investment

• Markets can fail or have significant externalities.

The graph represents

• the labor market
• the consumer market
• the housing market
• the stock market

Define the term voluntary unemployment

• Voluntary unemployment is when people are unable to find jobs due to a lack of skills.
• Voluntary unemployment is the situation where individuals are unemployed by choice, as they are unwilling to accept the given wage rate in the market

• Voluntary unemployment refers to individuals who are forced to leave their jobs due to health issues.
• Voluntary unemployment occurs when individuals are laid off due to company downsizing.

The demand for labour comes from

• automation technology
• unemployed individuals
• government regulations
• employers or businesses

The supply of labour comes from

• Children under working age
• Retired individuals
• Unemployed individuals not seeking work
• Individuals in the working-age population

The vertical axis (y axis) in the labour market represents

• job vacancies
• wage rate or salary level
• employment rate
• worker productivity

The horizontal axis (x axis) in the labour market represents

• Total wage levels
• Government regulations
• Quantity of labor supplied or demanded
• Employee benefits

When the wage rate is above equilibrium wage rate it creates a

• shortage of labor
• surplus of labor or unemployment
• higher job satisfaction
• increase in wages

A surplus of labour is otherwise known as

• underemployment
• job scarcity
• economic growth
• unemployment

In the loanable funds market, the demand for loans comes from

• borrowers seeking funds for investment or consumption.
• individuals looking to save money.
• government agencies providing grants.
• lenders seeking to invest their savings.