In the Keynesian aggregate expenditures model, prices are assumed to be fixed because resources are underutilized.

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In the Keynesian aggregate expenditures model, prices are assumed to be fixed because the assumption is that resources are underutilized due to a lack of effective demand in the economy. In this situation, businesses are not producing at their full capacity and therefore cannot increase prices without losing their customers.

In the Keynesian Aggregate Expenditures Model, Prices Are Assumed to Be