Question

Which of the following are assumptions of the macroeconomic model covered in class (the simple "Keynesian"...

Which of the following are assumptions of the macroeconomic model covered in class (the simple "Keynesian" model)? (Check all that apply.)

1.The financing of foreign trade is included in the analysis

2. The price level in the economy adjust in the short run to changes in spending

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Answer #1

Out of the two options mentioned above in the analysis, it can be stated that none of the options is taken as an assumption in the simple Keynesian model. The assumption of financing foreign trade is not included in the analysis . It is a three sevtor model and economy is assumed to be closed. Also, price level in the economy are assumed to be sticky in the short run and do not adjust in the short run to changes in spending in the economy. Thus, none of the two options is chosen

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