Fixed Prices, Real GDP & Expenditure Plans Flashcards

1
Q

what dose prices & expenditure plans mean

A

if they sell more than they plan to & are constantly running out of inventory they will eventually increase their prices.
But on any given day their prices are fixed.

The Keynesian model describes the economy in the short run prices are fixed

  1. the price level is fixed
  2. aggregate demand determines real GDP
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