2.3.3 Long-run AS Flashcards
1
Q
What is the classical view of the LRAS?
A
The belief that the macro economy would always settle at the full employment level
2
Q
What is the Keynesian view of the LRAS?
A
The belief that the macro economy could not settle at the full employment level, instead, beneath it
3
Q
The classical LRAS curve…
A
4
Q
When the labour market adjusts, in the classical view what happens to wages?
A
Workers will have their wages adjusted resulting in no unemployment, instead lower wages
5
Q
What do Keynesian economists believe about the adjustment on the macro economy?
A
Inflexibilities stop the economy from adjusting quickly. Workers will not accept lower wages, so reduncies occur meaning the full level of employment cannot be reached
6
Q
What 6 factors influence LRAS?
A
7
Q
A
