Q- Differentiate between full employment equilibrium and under employment equilibrium with diagram.
Please explain in detail.
Hey Anmol,
Classicals introduces the concept of full employment. Full employment equilibrium is the equilibrium where the resources of a country are fully and efficiently employed. On the other hand, Keynes was the first economist to show the possibility of underemployment equilibrium. In underemployment equilibrium, equilibrium is achieved before the full employment level. This is what we learn under the topic of deflationary gap.
To understand the concept of deflationary gap, follow the link given below.
https://www.meritnation.com/cbse/class12-commerce/studymaterial/economics/introductory-macroeconomics/income-determination/341_1989_5847#slide1_Problem of Deficit and Excess Demand
Classicals introduces the concept of full employment. Full employment equilibrium is the equilibrium where the resources of a country are fully and efficiently employed. On the other hand, Keynes was the first economist to show the possibility of underemployment equilibrium. In underemployment equilibrium, equilibrium is achieved before the full employment level. This is what we learn under the topic of deflationary gap.
To understand the concept of deflationary gap, follow the link given below.
https://www.meritnation.com/cbse/class12-commerce/studymaterial/economics/introductory-macroeconomics/income-determination/341_1989_5847#slide1_Problem of Deficit and Excess Demand