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What is the shape of the Keynesian Aggregate Supply before the level of full employment is attained?
Perfectly inelastic
Perfectly elastic
Unitary elastic
More elastic
- Option 1: Perfectly inelastic
- At full employment, the Keynesian Aggregate Supply (AS) becomes vertical and perfectly inelastic, showing no additional output can be produced.
- Option 2: Perfectly elastic
- Before full employment, the Keynesian AS curve is typically horizontal. Firms can increase production without increasing prices due to idle resources and unemployment.
- Option 3: Unitary elastic
- This implies a proportionate change in output and price, not typical of the initial stages of the Keynesian AS curve.
- Option 4: More elastic
- Suggests something is elastic but not perfectly so, which doesn’t perfectly describe the Keynesian AS before full employment.
By: santosh ProfileResourcesReport error
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