Unlike in the Long-Run Model, in the Short-Run Keynesian Model

question 101

Multiple Choice

Unlike in the long-run model, in the short-run Keynesian model, we make two critical assumptions: that firms adjust production depending on _______, and that _______.

• A) total demand; prices are fixed
• B) resource limitations; prices are flexible
• C) the market rate of interest; consumers maximize utility
• D) consumer spending; there is full employment

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell, holding other factors constant.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping.

Milk Suppliers

Entities involved in the production and distribution of milk and milk-related products to consumers and businesses.

Rental Price

The amount of money charged for the temporary use of a property or equipment.