Final answer:
The basic Keynesian model assumes that in the short run, firms meet the demand for their products at preset prices. The correct option is c. In the short run, firms meet the demand for their product at preset prices.
Step-by-step explanation:
The fundamental assumption of the basic Keynesian model is c. In the short run, firms meet the demand for their product at preset prices. This reflects the concept that prices and wages are "sticky" in the short term, which suggests that firms are more likely to adjust output rather than prices in response to changes in demand. In the context of the Keynesian model, aggregate demand heavily influences economic performance in the short run; however, this does not imply that supply-side factors like labor or capital are unimportant. Economies have supply constraints that cannot be ignored even with heightened demand.
Keynes's law is pivotal in understanding the short-term economic situation such as during recessions or booms. In the short term, according to Keynesian economics, firms will meet current demands at predetermined prices due to rigidities in price adjustments. Over a longer period, as suggested by the neoclassical perspective, wages and prices become more flexible, leading to adjustments that reflect real GDP's size based on potential GDP and aggregate supply.