Final answer:
The statement is true; the simple Keynesian model concentrates on a closed economy, excluding the foreign sector to simplify analysis and focus on domestic economic interactions.
Step-by-step explanation:
The statement that there is no foreign sector in the simple Keynesian model is true. The basic Keynesian model, especially when discussing aggregate demand, concentrates on a closed economy where only three sectors—households, businesses, and the government—interact. While more comprehensive versions of Keynesian economics might include the foreign sector, basic models often exclude international trade to simplify analysis and focus on domestic economic activities. This means they do not account for exports and imports, and their effect on aggregate demand is ignored. In the simple Keynesian model, the government does influence the economy through spending and tax policies to manage aggregate demand without the need for microeconomic price controls. Moreover, the model recognizes the potential difficulties in implementing fiscal policies such as estimating potential GDP or navigating the lag times associated with legislative processes.