Aggregate Supply Flashcards
Define aggregate supply
the total quantity of goods and services that businesses within an economy are willing and able to supply at a given general price
What does Short-Run mean
In the short run, it is assumed that money wage rates and the factors of production (CELL) are fixed
What does Long-Run mean
In the long run, all factors of production (CELL) are variable and can be increased sustainably
True or False, are SR and LR time periods?
False
What leads to movements along the SRAS curve
Price changes
Name some factors that would shift SRAS
- A change in the costs of production
- Changes in tax rates
- Changes in exchange rates
(these shift LRAS both left and right)
What are the factors shifting LRAS
Q2CELL and productive efficiency
what are some influences on LRAS
- technological advancements
- changes in relative productivity
- changes in government regulation
- demographic changes and migration
- competition policy
- changes in education and skills
What does YFE represent
Maximum capacity, full employment
What line is the Classical LRAS curve
Vertical line
What line is the Keynesian LRAS curve
horizontal curving to vertical (an actual curve)
What are the three sections of Keynesian LRAS
- spare capacity
- rising growth, employment
- maximum capacity
If AD shifts on the vertical of the Keynesian LRAS curve, what does it cause
inflationary pressure