In the classical theory of employment, the division of income between consumption and saving is…

In the classical theory of employment, saving is a function of the rate of interest: a higher rate of interest rewards waiting, so people save more and consume less out of a given income, and the rate of interest brings saving and investment into equality. The view that consumption and saving depend mainly on the level of income belongs to Keynes. In the classical scheme the quantity of money determines the price level, and money wages adjust to clear the labour market.