2.3: Aggregate Supply (AS)

Question 1

Define:

Aggregate Supply (AS)

Answer 1

The quantity of goods and services that producers in an economy are willing and able to supply at a given price level.

Question 2

Name:

Two types of AS

Answer 2

SRAS (short run AS) and LRAS (long run AS)

Question 3

What does SRAS show

Answer 3

How much output the economy can generate in the short run at each price level

Question 4

Name:

Main factor causing a shift in the SRAS curve

Answer 4

The resource cost of producing goods and services

Question 5

Explain:

Long run in macroeconomics

Answer 5

The period taken for the general price levels, contractual wage rates and expectations to fully adjust to the state of the economy

Question 6

Name:

Two models of LRAS curve

Answer 6

Keynesian and (Neo)classical

Question 7

Which other economic model is the LRAS curve comparable to

Answer 7

PPF (Production Possibility Frontier) as it is when FOPs are used to full extent.

Question 8

Name:

What causes a shift in the LRAS curve?

Answer 8

A change in the quantity and/or quality of our factors of production, increasing productive potential.