2.3 Aggregate Supply

Question 1

What is aggregate supply?

Answer 1

Volume of goods and service produced within an economy at a given price within a given period of time

Question 2

Factors that cause shift in SRAS.

Answer 2

1. Wages
2. Raw materials
3. Oil prices
4. Business tax (VAT)
5. Import prices

Question 3

Why does LRAS shift right?

Answer 3

1. Increase in quality and quantity of fop’s
2. Increase in productive efficiency

Question 4

Factors that cause LRAS to shift right.

Answer 4

1. Improvement in labour productivity
2. Higher investment
3. Increased infrastructure
4. Increased quantity of labour (migration, incentives)
5. Competition
6. New resource discoveries