What factors can affect the full employment, in classical macroeconomic models?

Economics Dec 14, 2020

Expert Solution

According to the classical macroeconomic models, the assumption of full employment is a common economic condition which signifies a specific market condition where the demand for labor is equal to the supply of labor at every level of the current real wage rate.

On the basis of the explanation, we can conclude that in the classical macroeconomic models, the level of full employment is affected by:

1. Demand for labor.

2. Supply of labor.

3. The real wage of workers.

4. Perfect competition.

5. The objective of profit maximization.

6. The price mechanism.

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