If the price level is taken as given in a simple macro model with demand-determined output,it is implicitly being assumed that
A)net exports are positive.
B)net exports are negative.
C)the marginal propensity to consume out of disposable income is equal to the marginal propensity to spend out of national income.
D)all resources in the economy are fully employed.
E)producers can provide whatever output is demanded of them without requiring higher prices to offset any higher costs.

Question

Quizplus · Accepted Answer

In a simple macro model where the price level is taken as given and output is demand-determined, it is assumed that producers can meet any level of demand without needing to raise prices to cover increased costs. This implies that there are enough resources and capacity in the economy to increase production as needed without encountering bottlenecks that would push prices up.

If the Price Level Is Taken as Given in a Simple