2.3 Aggregate Supply

Question 1

What is the difference between short and long run AS?

Answer 1

In the short run, at least one factor of production is fixed whereas in the long run all factors are variable. SRAS covers period of time immediately after a price change

Question 2

What factors influence short run AS?

Answer 2

Changes in Costs of Production
Raw Materials & Energy
Changes in Exchange rates
Changes in tax rates

Question 3

How does technology influence long run AS?

Answer 3

Produce higher quality goods and produce more efficiently

Question 4

How does productivity affect long run AS?

Answer 4

More productive workforce produces larger output with same input

Question 5

How does education and skills affect long run AS?

Answer 5

Leads to a more productive workforce and can produce higher quality goods

Question 6

How do gov regulations affect long run AS?

Answer 6

Could limit efficiency - known as red tape

Question 7

How do demographic changes and migration affect LRAS?

Answer 7

If net inward migration and majority of population is of working age, output will increase

Question 8

How will competition policy affect LRAS?

Answer 8

More competitive markets force firms to be more efficient