The Keynesian assumptions of the macroeconomy include each of the following except
A) wages and prices can be "sticky" or "fixed."
B) expectations are volatile and can take many forms.
C) the labor market is always in equilibrium with full employment.
D) shocks to aggregate demand will change the composition and the level of GDP.

Question

Quizplus · Accepted Answer

Keynesian economics does not assume that the labor market is always in equilibrium with full employment. Instead, it suggests that the labor market can be in disequilibrium, with unemployment due to factors like wage stickiness.

The Keynesian Assumptions of the Macroeconomy Include Each of the Following