1.3 AS

Question 1

Definition of AS

Answer 1

The total amount that producers in an economy are willing and able to supply at a given price level and in a given time period.

Question 2

Definition of SRAS

Answer 2

The relationship between the price level and the quantity of output that firms are willing to produce in the short term.

Question 3

What causes a shift in the SRAS curve?

Answer 3

Producer tax / subsidies
Immigration
Factor productivity
Wage rates
Raw material costs

Question 4

What are the two types of LRAS?

Answer 4

Classical
Keynesian

Question 5

What does an increase in productive potential do to a LRAS graph?

Answer 5

Pushes LRAS to the right

Question 6

What does an decrease in productive potential do to a LRAS graph?

Answer 6

Pushes LRAS to the left

Question 7

What does the LRAS graph represent?

Answer 7

The economy’s potential output in the long run

Question 8

Factors which cause the LRAS to shift

Answer 8

Labour productivity
Amount of capital
War
Advancements in technology
Migration
Interest rates
Enterprise
Funding undiscovered raw materials
Unemployment levels
Investment

Question 9

What happens to the PPC when LRAS shifts right?

Answer 9

PPC also shifts right

Question 10

What happens to the PPC when LRAS shifts left?

Answer 10

PPC also shifts left