the aggregate expenditures model is built upon which of the following assumptions? multiple choice prices are fully flexible. prices are fixed. the economy is at full employment. government spending policy has no ability to affect the level of output.

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21-10-2022
Business

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the aggregate expenditures model is built upon which of the following assumptions? multiple choice prices are fully flexible. prices are fixed. the economy is at full employment. government spending policy has no ability to affect the level of output.

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akankshasharma92 akankshasharma92 · Answer 1 · 2022-10-25T03:16:50-04:00

The aggregate expenditures model is built upon which of the following assumptions: Prices are fixed.

Keynes developed the aggregate expenditure (AE) model. He assumed that prices are set and rigid. Keynes demonstrated in the model that equilibrium is reached when the whole value of the economy's output equals the aggregate expenditure in the economy. He presupposed that the price level was established for this.

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