Question

In the simple Keynesian model, there are three simplifying assumptions. Among these assumptions is: __________

a. the price level is flexible no foreign sector
b. the price level is constant until
c. the economy reaches its full-employment level
d. the money supply always rises b and c

Answer 1

Answer: B and C

No foreign sector

The price level is constant until the economy reaches its full-employment level

Step-by-step explanation:

Keynesian economics refers to the theory that relates to total spending in the economy and how it affects output, Inflation and employment in the economy.

Assumptions of the Keynesian Model include:

• No foreign sector as economy is closed.

• Demand creates its own supply.

• The aggregate price level is fixed. ...

• The price level is constant until the economy reaches its full-employment level

• No retained earnings etc.