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      Question

      Which of the following is not an assumption of Keynesian

      Simple model?
      A Flexible wages Correct Answer Incorrect Answer
      B There are constant returns to scale so that prices do not rise or fall as output increases Correct Answer Incorrect Answer
      C The economy is closed β€” there is no export and import Correct Answer Incorrect Answer
      D Labor has money illusion Correct Answer Incorrect Answer

      Solution

      Keynesian economics assumes that there is wage rigidity.

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