A Keynesian model is one in which prices are sticky:
A) in the short run only.
B) in the short run and in the long run.
C) in the long run only.
D) so that they never depend on the money supply.

Question

Quizplus · Accepted Answer

In a Keynesian model, prices are assumed to be sticky in the short run due to factors such as menu costs, labor contracts, and imperfect information. However, in the long run, prices may adjust to changes in the money supply or other macroeconomic variables.

A Keynesian Model Is One in Which Prices Are Sticky