2.3

Question 1

What is long run aggregate supply?

Answer 1

• Represents the productive capacity/ potential of an economy, given its factors of production

Question 2

What is the multiplier?

Answer 2

• An initial change In on injection or leakage can have a greater final impact on GDP, equilibrium national income

Question 3

What is the positive multiplier effect?

Answer 3

• initial increase in an Injection (decrease in leakage) leads to a greater final increase in the level of real GDP

Question 4

What is the negative multiplier effect?

Answer 4

-initial decrease in an injection (increase in leakage) leads to a greater final decrease in the level of real GDP

Question 5

What is net migration?

Answer 5

• Net change in the number of people moving to or from a country or region for work

Question 6

Examples that affect LRAS?

Answer 6

• Net migration
• improvements in technology
• discovery of source for raw materials