The main avenue by which a temporary change in government purchases in the classical model affects the labor supply is by
A)changing the population.
B)affecting the value of the stock market.
C)increasing business confidence.
D)affecting workers' wealth.

Question

Quizplus · Accepted Answer

In the classical model, a temporary change in government purchases does not affect the population, stock market, or business confidence. However, it can affect workers' wealth by causing a temporary increase in demand for labor, leading to higher wages and potentially increasing labor supply as workers feel wealthier and more incentivized to work.

The Main Avenue by Which a Temporary Change in Government