The use of a backward-L shaped aggregate supply curve allows us to ________ in a way that other shapes would not.
A)consider various levels of prices
B)consider different macroeconomic points of view
C)deal with shifting curves
D)create an equilibrium

Question

Quizplus · Accepted Answer

The backward-L shaped aggregate supply curve allows us to deal with shifting curves, as it allows for a vertical segment at the beginning (representing a fixed level of production capacity), and a horizontal segment at the end (representing a situation where all available resources are fully utilized). This shape allows us to consider the effects of shifts in aggregate demand or supply without having to redraw the entire curve.

The Use of a Backward-L Shaped Aggregate Supply Curve Allows