Final answer:
In the Keynesian zone, the SRAS curve is flat because the economy has unused capacity and labor, allowing for output increases without significant price rises. Expansionary fiscal and monetary policies are effective in this zone, as they can stimulate demand, and increase output and employment, without much impact on inflation.
Step-by-step explanation:
The short-run aggregate supply curve (SRAS) is likely to be fairly flat at low levels of aggregate output in the Keynesian zone. This flatness is due to the existence of substantial amounts of unused capacity and labor in the economy during a recession or when output is below potential GDP. Firms can increase production without a significant increase in prices because they are not operating at full capacity.
Expansionary fiscal and monetary policy can be particularly effective in the Keynesian zone. Since the economy is not at full capacity, such policies can lead to increases in output and employment without causing much inflation. Fiscal policy such as tax cuts and increased government spending, and monetary policy actions like cutting interest rates can stimulate demand and shift the aggregate demand curve to the right, helping the economy move towards potential GDP and full employment.