2.2.6 Determinants of long-run aggregate supply

Question 1

determinants of LRAS

Answer 1

• technology
• productivity
• factor mobilty
• enterprise
• incentives and attitudes
• institutional structure of econ

Question 2

determinants of LRAS

technology

Answer 2

Advances in technology increase the amount firms can produce with the aame resources available.

Question 3

determinants of LRAS

productivity

Answer 3

more skilled workers = more productive = more produced per worker = right shift

Question 4

determinants of LRAS

factor mobility

Answer 4

Increases in workers’ willingness to swap locations and types of job will improve factor mobility, which means an economy can produce more output overall.

Question 5

determinants of LRAS

enterprise

Answer 5

Encouraging more people to become entrepreneurs and set up their own businesses will increase the capacity of an economy and will shift the LRAS curve rightward.

Question 6

determinants of LRAS

incentives and attitudes

Answer 6

incentives in taxes and benefits, as well as changes in legislation, can affect how willing people are to work in the first place and how long, and how hard, they will work within their jobs.

Question 7

determinants of LRAS

institutional structure of econ

Answer 7

How effective the financial sector is in moving funds from savers to borrowers, determines the availability of business funds for investment, which can add to the productive capacity of the economy.
legal systems

Question 8

causes LRAS shift to right

Answer 8

• Technological advances
• Changes in relative productivity
• Changes in education & skills
• Changes in government regulations
• Demographic changes and migration
• Competition policy