In the classical model, what is the impact of changes in the demand fo

In the classical model, what is the impact of changes in the demand for goods and services on aggregate output? Do they affect any real variables?

What will be an ideal response?

ANSWER

Factors such as the quantity of money, the level of government spending, and the level of demand for investment goods by the business sector are all demand-side factors and have no role in determining output and employment. Also, changes in taxes, to the degree that they affect the demand side, will neither affect output nor employment. The level of aggregate demand has no effect on output because output and employment are supply-determined.