Question

"According to classical macroeconomic theory,"

a. the price level is sticky in the short run and it plays only a minor role in the short-run adjustment process.
b. for any given level of output, the interest rate adjusts to balance the supply of, and demand for, money.
c. output is determined by the supplies of capital and labor and the available production technology.

Answer 1

According to classical macroeconomic theory , all the given options suits it.

All of the above are correct.

Explanation:

Classical macroeconomic theory is based on the classical theory in which the emphasis is mostly on the supply chain rather than the demand. In this theory, the price levels always move slowly or are sticky in the short run as compared to the old run.

In this theory, the capital, labor, and the available production supplies determines the output and for reaching to any output, demand for money and supply is adjusted by the interest rate.