In the simplest Keynesian model of the determination of income,interest rates are assumed to be
A)exogenous and to gradually change.
B)endogenous and to gradually change.
C)exogenous and to remain constant.
D)endogenous and to remain constant.

Question

Quizplus · Accepted Answer

In the simplest Keynesian model, interest rates are assumed to be exogenous and to remain constant. This means that interest rates are determined outside the model and do not fluctuate over the short run. The focus of the model is on how changes in aggregate expenditures (consumption, investment, government spending, and net exports) affect output and income in the economy.

In the Simplest Keynesian Model of the Determination of Income,interest