According to the Keynesian model, what is the basic assumption regarding firms in the short run?

In the Keynesian model, the fundamental assumption regarding firms in the short run is that they meet demand at the present price. This means that firms will produce a level of output that satisfies the current level of consumer demand without altering prices. The reasoning here is that during periods of economic fluctuations or uncertainty, firms may not adjust prices frequently due to factors such as price rigidity or the desire to avoid alienating customers. Instead, they respond to shifts in demand by adjusting their output levels to match what consumers are willing to buy at the given market price.

This approach reflects a practical view of business operations, where firms aim for stability in their pricing strategies and instead focus on responding to changes in demand. In a Keynesian framework, this can lead to situations where the economy operates below full capacity if demand falls short, as firms are not incentivized to change prices but instead adjust production levels. Understanding this aspect of the Keynesian model is crucial, as it highlights the role of aggregate demand in influencing economic activity and output in the short run.