Consider the following statements about the Classical and Keynesian approaches to the determination of output and employment:

  1. The Classical approach assumes that wages and prices are flexible and markets always clear.
  2. Keynesian economics argues that active government intervention is necessary to achieve full employment.
  3. In the Classical model, savings always equals investment due to the flexibility of the interest rate.

Which of the above statements are correct?

1
1 and 2 only
2
2 only
3
1 and 3 only
4
2 and 3 only
5
1, 2, and 3

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