... achieve its greatest benefits if individuals acted upon their 'self-interest' in making a profit. 'He intends only his own security, only his own gain. And he is in this led by an invisible hand to promote an end which was no part of his intention' (Adam Smith, 1776). i The above quote shows how Adam Smith described this by using his theory of the 'invisible hand' to back it up. The classical model of the economy suggests that all markets are always at equilibrium. The labor market failing to reach equilibrium level cannot exist in the classical model because of the competitive exchange equilibrium. This way quantities and prices can adjust accordingly. The classical model is for a closed economy and the variable are employment, real and nominal wages, prices levels, interest rates and real output. The early economist also believed that the economy was always at the equilibrium level ...

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