In the Simple Keynesian Model,there Are Three Simplifying Assumptions

question 100

Multiple Choice

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

• A) the price level is flexible
• B) no foreign sector
• C) the price level is constant until the economy reaches its full-employment level
• D) the money supply always rises
• E) b and c

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Definitions:

Total Revenue Product

The total revenue generated from selling the output produced by an additional unit of a factor of production, such as labor or capital.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, assuming other factors remain constant.

Wage Rate

The standard amount of compensation that employees receive in exchange for performing a specific task or job per time period.

Substitution Effect

The adjustment in purchasing behaviors as a result of variations in the comparative costs of products, prompting buyers to switch from one item to another that is either cheaper or more costly.