According to the Keynesian model,
A)wages are flexible because workers wouldn't otherwise be able to keep their jobs.
B)the price level is somewhat fixed due to social forces, which keeps an economy from remaining at an equilibrium level of unemployment.
C)prices are subject to significant fluctuations as demand and supply change.
D)the government puts price controls on the economy, keeping the price level fixed.

Question

Quizplus · Accepted Answer

In the Keynesian model, the price level is considered somewhat fixed, often due to social contracts and norms, rather than purely market forces. This rigidity can prevent the economy from adjusting to a natural level of full employment, leading to periods of higher unemployment.

According to the Keynesian Model