Final answer:
Mainstream economists believe that aggregate expenditures, which consist of consumption, investment, government spending, and net exports, are the basic determinants of real output, employment, and price level. Option B is correct.
Step-by-step explanation:
According to mainstream economists, the basic determinant of real output, employment, and the price level is the level of aggregate expenditures. Aggregate demand consists of four elements: consumption, investment, government spending, and exports less imports.
It is the total spending on the nation's goods and services, and it determines the level of real GDP in the short run, subject to the influence of aggregate supply. In contrast, aggregate supply indicates how businesses will respond to the price level for outputs across the economy.
The Keynesian perspective emphasizes that aggregate demand is the primary driver of economic activity in the short run. Firms produce output expecting it to sell, and if demand is not present, production and hence real GDP will fall, potentially leading to unemployment.
Factors that can affect aggregate demand and supply include government tax and spending decisions, consumer and business confidence, key input prices, and technology changes. Moreover, the theory of rational expectations suggests that people anticipate the long-term outcomes of economic changes and make decisions accordingly, thus affecting the price level over time.