A key assumption of the Keynesian model of macroeconomics is a fixed _____.
A)interest rate
B)price level
C)exchange rate
D)real GDP
E)unemployment level

Question

Quizplus · Accepted Answer

In the Keynesian model, the short-run aggregate supply curve is assumed to be horizontal or flat, indicating that prices are fixed in the short run. This assumption allows for the possibility of involuntary unemployment and for government intervention through fiscal policy to stimulate demand and increase output in the short run.

A Key Assumption of the Keynesian Model of Macroeconomics Is