The macroeconomic model may be completed by adding either the Keynesian assumption that ______ or the classical assumption that ______.
A) output is fixed; prices are fixed
B) prices are fixed; output is fixed
C) the interest rate is fixed; the money supply is fixed
D) prices are flexible; output varies

Question

Quizplus · Accepted Answer

The Keynesian assumption is that prices are fixed, particularly in the short run, and the classical assumption is that output is fixed, with the economy always returning to full employment in the long run.

The Macroeconomic Model May Be Completed by Adding Either the Keynesian