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

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