A further increase in AD as rises in real income cause more spending. A rise in AS as firms make more output due to higher demand. An increase in FE as the economy produces more output.
Question 6:
Classical economists believed that if saving exceeded investment, prices and interest rates would rise as businesses accumulated unwanted inventories. Flexible prices and wages could not restore an economy to full employment if the interest rate were rigid. Flexible interest rates, wages, and prices would assure full employment. All unemployment was involuntary.