Question

Unlike the real world, the classical model with fixed output assumes that: A. Group of answer choices all capital is fully utilized but some labor is unemployed. B. some capital lies idle and some labor is unemployed. C. all factors of production are fully utilized. D. all labor is fully employed but some capital lies idle.

Answer 1

Answer is C. all factors of production are fully utilized

Explanation

The Classical model and the Keynesian model are the two models used by the economists in describing the economy.

The classical model explains that , all the time, the economy is at full employment.This means that, everyone that is interested to work are able to work and that the resources are being utilized to maximum capacity.

The Keynesian model was named after John Maynard Keynes, and it explains the opposite of the classical model. That is, it says that the economy is not always at full employment. This means that, there is a great number of unemployment and that the resources will not be utilized to maximum capacity.