How Does the Original, Simplified Keynesian Model Compare with Modern

question 207

Multiple Choice

How does the original, simplified Keynesian model compare with modern Keynesian analysis?

• A) The original Keynesian model assumed price flexibility whereas the modern analysis does not.
• B) In both cases, the short-run aggregate supply curve (SRAS) is horizontal.
• C) Modern analysis shows an upward sloping SRAS to reflect some price flexibility. The original Keynesian model's SRAS is horizontal and assumes sticky prices.
• D) All of the above.

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