Question : Assertion: According to Keynesian theory, the equilibrium level is always achieved at the full employment level.
Reason: At full employment equilibrium, there is no involuntary unemployment.
Option 1: Both Assertion and Reason are correct, and the Reason is the correct explanation of the Assertion.
Option 2: Both Assertion and Reason are correct, but the Reason is NOT the correct explanation of the Assertion.
Option 3: Assertion is correct, but the Reason is incorrect.
Option 4: Assertion is incorrect, but the reason is correct
Correct Answer: Assertion is incorrect, but the reason is correct
Solution : The correct answer is (D) Assertion is incorrect, but the reason is correct.
The Assertion that, according to Keynesian theory, the equilibrium level is always achieved at the full employment level is incorrect. According to Keynesian economics, the equilibrium level of output can occur below, at, or above full employment.
The Reason provided, however, is correct. At the full employment level of equilibrium, there is no involuntary unemployment. Full employment refers to the situation where all available labor resources are utilized, and there is no cyclical or involuntary unemployment in the economy.
Therefore, while the Reason provided is correct in stating that there is no involuntary unemployment at the full employment level, the Assertion is incorrect because Keynesian theory does not suggest that the equilibrium level is always achieved at the full employment level.
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