2.3 aggregate supply - definitions

Question 1

Aggregate Supply

Answer 1

The total quantity of goods and services firms are willing to produce.

Question 2

Short-run AS influences

Answer 2

-Changing cost of raw materials
-Changing cost or energy (oil, coal, renewables)
-Changing exchange rates
-Changing tax rates.

Question 3

Long-run AS influences

Answer 3

-Technological advances
-Changes in relative productivity
-Education and skill levels in the economy
-Government regulations.
-Demographic changes and migration
-Competition policy

Question 4

Classical short run AS Curve

Answer 4

Upward sloping curve – straight line left to right.

Question 5

Classical Long-run AS curve

Answer 5

Vertical straight line.

Question 6

Keynesian AS curve

Answer 6

3 phases: Horizontal at low levels of output, then upward sloping (bottlenecks) then vertical (full capacity or full employment).