The Keynesian aggregate expenditures model assumes that price level is constant.

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The Keynesian aggregate expenditures model assumes that price level is constant and that changes in aggregate expenditures are primarily determined by changes in government spending, investment, and net exports, as well as changes in consumer spending that are influenced by disposable income and the marginal propensity to consume. This model is used to analyze the economy in the short run and is based on the assumption that prices are fixed, which allows changes in aggregate demand to affect output and employment levels. In reality, however, prices are not always constant, and the model may not be as accurate in predicting economic outcomes under conditions of inflation or deflation.

The Keynesian Aggregate Expenditures Model Assumes That Price Level Is