Q.According to Classical theory, rate of interest is a reward for ________.

Classical economists regarded the rate of interest as a reward for saving, so option (c) is correct.

This is a core idea in the theories-of-employment topic of the Tamil Nadu HSC Commerce syllabus. In the classical theory, the rate of interest is determined by the demand for and supply of capital (savings). Saving involves sacrificing present consumption, so the interest paid is the reward for this abstinence or 'waiting'.

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