Economics · Macroeconomics

The Classical Theory of interest posits that the interest rate is determined by the intersection of the supply of savings and the demand for investment. Statement I: The supply of savings is considered a function of the interest rate, where a higher interest rate leads to a decrease in the volume of savings as people prefer to spend now. Statement II: The demand for capital (investment) is inversely related to the interest rate because as the cost of borrowing increases, fewer investment projects remain profitable. Statement III: The Classical Theory is often criticized for being 'indeterminate' because it assumes a fixed level of income, which in reality changes when the interest rate changes. Which of the statements given above are correct?