In the classical model,
A) markets do not automatically clear.
B) business demand for loanable fund exceeds business planned investment spending.
C) business demand for loanable fund is equal to business planned investment spending.
D) businesses engage in interest-free borrowing.
E) the government's demand for funds is downward sloping.

Question

Quizplus · Accepted Answer

According to the classical model, business demand for loanable funds is equal to business planned investment spending. In this model, markets automatically clear and there is no interest-free borrowing. The government's demand for funds is not discussed in this context.

In the Classical Model