What are keynes model assumptions?

Keynesian economic models are based on the assumptions of effective demand, imperfect competition, finite employment and price and wage flexibility. Effective demand can be defined as the level of demand that will clear markets; it is assumed that if the demand falls below this level, there will be a surplus in the markets, which could lead to deflation and unsold goods. Imperfect competition is a model which assumes that some firms have market power and the ability to set the prices of the goods. This means that the prices of goods can deviate from the equilibrium price. Finite employment is a model which assumes that full employment is achievable only at the cost of output and employment getting stuck at some lower level than the natural maximum. Price and wage flexibility is assumed to exist. This means that changes in the demand for goods and services influence not only prices, but also wages (which in turn influence the purchasing power of the consumer). This can have a knock-on effect on aggregate demand and investment levels.