In a classical model with fixed factors of production and flexible prices, the amount of consumption spending depends on _____, the amount of investment spending depends on _____, and the amount of government spending is determined _____.
A)the interest rate; disposable income; by tax revenue
B)the real wage; the real rental price of capital; by factor prices
C)labour's share of output; capital's share of output; by the interest rate
D)disposable income; the interest rate; exogenously

Question

Quizplus · Accepted Answer

In the classical model, consumption spending is a function of disposable income, investment spending is influenced by the interest rate, and government spending is determined exogenously, not by economic variables.

In a Classical Model with Fixed Factors of Production and Flexible