Aggregate Supply Flashcards
1
Q
what is aggregate supply
A
the potential output of all goods and services that are produced within an economy over a period of time
2
Q
what can cause a contraction or expansion of AS
A
utilising more of the existing FoP
3
Q
what causes a shift in the SRAS
A
- changes in costs of raw materials + energy
- changes in exchange rate
- changes in tax rate
4
Q
what are the two forms of LRAS
A
keynsian and classical
5
Q
what causes a shift in the LRAS
A
change in the quality/quantity of the the FoP
6
Q
what is the full employment output
A
when an economy fully utilised all of its FoP
7
Q
what happens at full employment
A
- high business and consumer confidence
- low unemployment rate
- low saving from households
8
Q
what happens at low employment
A
- high unemployment
- low business/consumer confidence
- low inflation rates
9
Q
how is actual economic growth shown on a LRAS graph
A
shift in AD
10
Q
how is potential economic growth shown on a LRAS curve
A
shift in LRAS
