Aggregate Supply Flashcards

1
Q

Define aggregate supply

A

the total quantity of goods and services that businesses within an economy are willing and able to supply at a given general price

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2
Q

What does Short-Run mean

A

In the short run, it is assumed that money wage rates and the factors of production (CELL) are fixed

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3
Q

What does Long-Run mean

A

In the long run, all factors of production (CELL) are variable and can be increased sustainably

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4
Q

True or False, are SR and LR time periods?

A

False

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5
Q

What leads to movements along the SRAS curve

A

Price changes

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6
Q

Name some factors that would shift SRAS

A
  • A change in the costs of production
  • Changes in tax rates
  • Changes in exchange rates
    (these shift LRAS both left and right)
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7
Q

What are the factors shifting LRAS

A

Q2CELL and productive efficiency

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8
Q

what are some influences on LRAS

A
  • technological advancements
  • changes in relative productivity
  • changes in government regulation
  • demographic changes and migration
  • competition policy
  • changes in education and skills
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9
Q

What does YFE represent

A

Maximum capacity, full employment

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10
Q

What line is the Classical LRAS curve

A

Vertical line

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11
Q

What line is the Keynesian LRAS curve

A

horizontal curving to vertical (an actual curve)

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12
Q

What are the three sections of Keynesian LRAS

A
  1. spare capacity
  2. rising growth, employment
  3. maximum capacity
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13
Q

If AD shifts on the vertical of the Keynesian LRAS curve, what does it cause

A

inflationary pressure

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