All the labourers who are ready to work will find employment and all the factories will be working at their full capacity. When did this thinking change?

After the great recession of 2008 After the great depression of 1929 Any of above None of above

After the great depression of 1929

The dominant thinking in economics earlier was that all the labourers who are ready to work will find employment and all the factories will be working at their full capacity. This school of thought is known as the classical tradition. However, the Great Depression of 1929 and the subsequent years saw the output and employment levels in the countries of Europe and North America fall by huge amounts. It affected other countries of the world as well. Demand for goods in the market was low, many factories were lying idle, workers were thrown out of jobs. These events made economists think about the functioning of the economy in a new way.