In a Classical Model with Fixed Factors of Production and Flexible

question 122

Multiple Choice

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) labor's share of output; capital's share of output; by the interest rate
• D) disposable income; the interest rate; exogenously

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Definitions:

Dividend

A payout made by a corporation to its shareholders, usually as a distribution of profits.

Parent Company

A company that owns more than half of another company's stock and usually has a significant influence over it, often holding a controlling interest.

Constitution

The system of fundamental principles or established precedents according to which a state or other organization is governed.

Dividends Payable

represents a company's obligation to pay its shareholders a declared amount from its earnings.