Among the following, what is assumed as the appropriate justification for taking the price level as fixed?

An economy with unused resources.

The correct answer is Option (4) → An economy with unused resources.

In the Keynesian model, especially when analyzing the determination of income in the short run, the price level is assumed to be fixed. This assumption is justified on the basis that the economy has unused or underutilized resources — such as unemployed labor or idle capacity in factories.

NCERT : "What is the justification for taking the price level as fixed? Two reasons can be put forward: (i) at the first stage, we are assuming an economy with unused resources: machineries, buildings and labours. In such a situation, the law of diminishing returns will not apply; hence additional output can be produced without increasing marginal cost. Accordingly, price level does not vary even if the quantity produced changes (ii) this is just a simplifying assumption. "