Economic Theorists Expanded on the Keynesian Aggregate Supply Model in the Late

question 13

Multiple Choice

Economic theorists expanded on the Keynesian aggregate supply model in the late 1940s, broadening it into a three-part aggregate supply curve. Which of the following best describes that three-part supply curve?

• A)A flat initial segment, followed by a modestly upward-sloping middle segment until full-employment GDP is reached, and finally a more steeply upward-sloping segment beyond full-employment GDP
• B)A flat initial segment, followed by an upward-sloping middle segment until full-employment GDP is reached, and finally a vertical segment at full-employment GDP
• C)A flat initial segment until full-employment is reached, followed by a vertical segment at full-employment GDP, and finally followed by another flat segment once the full-employment price level is reached
• D)An upward-sloping initial segment, followed by an upward-sloping segment until full-employment GDP is reached, and finally followed by another flat segment beyond full-employment GDP

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Definitions:

Safety Inventory

The stock of goods or materials kept on hand to protect against variations in demand or supply.

Lumpy Demand

Demand characterized by unpredictable fluctuations and variability, often challenging for businesses to manage effectively.

Safety Stock

Extra inventory held by a business to protect against stockouts due to variability in demand or supply chain disruptions.

Fill Rate

A performance metric that measures the percentage of customer demand that is met without backorders or stockouts.