In the classical model with fixed output, the supply and demand for goods and services are balanced by: Group of answer choices the interest rate. government spending. taxes. fiscal policy.

The interest rate.

Explanation:

The classical model is the economic theory which was developed before the emergence of the Keynesian economic theory (John Maynard Keynes). The classical model of economics postulated that the economy is self regulating, prices for goods and wages are flexible, supply of goods and services gives rise to its own demand and that investment is equal to savings. Some of the classical economists are Adam Smith, David Ricardo, Jean-Baptiste Say, and Thomas Malthus.

In the classical model with fixed output, the supply and demand for goods and services are balanced by the interest rate. This simply means that, when the level of production or quantity of output is fixed, the supply and demand for goods and services are directly affected by the interest rate. Under the classical model with fixed output, the interest rate is flexible and as such it adjusts to the number of goods supplied and demanded by the consumers.