3rd test on aggregate supply

Question 1

what is aggregate supply

Answer 1

the total value of output in an economy at a given price and time period

Question 2

what is the difference between long run and short run AS

Answer 2

in short run all FOP are fixed with the exception of labour where as long run all FOP are variable

Question 3

what are factors that affect SRAS

Answer 3

costs of production:
wages
price of raw materials
productivity of labour
taxes
exchange rates

Question 4

what does the LRAS represent

Answer 4

the maximum possible output an economy can produce with its FOP

Question 5

differences between keynesian and classical

Answer 5

• keynesian believed that government should control the prices however free market economists believed that demand controls supply(no waste).

Question 6

why does price increase at FE in a LRAS

Answer 6

this is caused by demand inflation there is a lot of demand but limited products /- resources

Question 7

what is the structure for 10 markers

Answer 7

Point
Explained
Contextualised
ANalysis
Point
In
Evaluation

Question 8

when does the LRAS shift

Answer 8

when quality or quantity is increased