1.3-Aggregate Supply Flashcards
What does Aggregate Supply (AS) represent in macroeconomics?
The total supply of goods and services that firms in an economy plan to sell during a specific time period.
True or False: Aggregate Supply is influenced only by the price level.
False.
Fill in the blank: The Aggregate Supply curve is generally ______ sloping in the short run.
upward.
What are the two main components of Aggregate Supply?
Short-run Aggregate Supply (SRAS) and Long-run Aggregate Supply (LRAS).
What does the Long-run Aggregate Supply (LRAS) curve represent?
The total output of goods and services an economy can produce when utilizing all resources efficiently.
What shifts the Short-run Aggregate Supply (SRAS) curve to the right?
An increase in production costs or improved technology.
Multiple Choice: Which of the following factors can shift the LRAS curve? A) Changes in the labor force B) Changes in consumer preferences C) Changes in taxes
A) Changes in the labor force.
What is the relationship between the price level and output in the short run?
In the short run, as the price level increases, output typically increases.
True or False: The SRAS curve can be vertical.
False.
What is the effect of an increase in wages on the SRAS curve?
It shifts the SRAS curve to the left.
Fill in the blank: The ________ is a point where the economy is producing at full employment.
natural rate of output.
What does a leftward shift of the AS curve indicate?
A decrease in the total output supplied at every price level.
Multiple Choice: Which of the following is NOT a determinant of Aggregate Supply? A) Resource prices B) Government regulations C) Consumer demand
C) Consumer demand.
What is the significance of the ‘sticky wages’ concept in AS?
It explains why wages do not adjust immediately to changes in economic conditions, affecting short-run output.
True or False: An increase in productivity will shift the SRAS curve to the right.
True.
What impact does a natural disaster have on Aggregate Supply?
It typically shifts the AS curve to the left due to destruction of resources.
Fill in the blank: The ________ is the point where the AD and AS curves intersect.
equilibrium.
What role does technology play in Aggregate Supply?
Advancements in technology can increase productivity and shift the AS curve to the right.
Multiple Choice: Which of the following would likely cause an increase in Aggregate Supply? A) A rise in oil prices B) A decrease in business taxes C) A decrease in the labor force
B) A decrease in business taxes.
What does the term ‘potential output’ refer to?
The maximum output an economy can produce without causing inflation.
True or False: Long-run Aggregate Supply is affected by price levels.
False.
Fill in the blank: An increase in the availability of resources will shift the AS curve ________.
to the right.
What is the impact of government regulations on Aggregate Supply?
Increased regulations can increase costs and shift the AS curve to the left.
Multiple Choice: Which of the following is a characteristic of the LRAS curve? A) It is upward sloping B) It is vertical C) It is downward sloping
B) It is vertical.
