Aggregate Supply/SRAS

Question 1

Define aggregate supply

Answer 1

is the quantity of goods and services that producers in an economy are willing and able to sell at a given price level

Question 2

What is on the x and y axis on an AS curve

Answer 2

X axis-Real GDP
Y axis-(general) Price Level

Question 3

Name the 2 types of aggregate supply

Answer 3

Short run AS
Long run AS

Question 4

What does a SRAS curve show

Answer 4

the relationship between PLANNED/Actual national output and the general price level

Question 5

On an SRAS curve,what will an increase and decrease in GPL lead to and explain why

Answer 5

Increase in GPL:expansion of supply due to high production costs meaning firms have to sell more to make a profit

Decrease in GPL: contraction in supply due to lower costs of production firms don’t have to sell as much to make a profit

Question 6

What is the main factor causing shift in SRAS

Answer 6

cost of producing goods and services

Question 7

Why is the SRAS curve upwards

Answer 7

higher prices for good and services makes output more profitable,enabling businesses to expand and hire even more labour

Question 8

What are other factors that cause a shift in SRAS

Answer 8

Change in resource/input prices:
-wage costs per unit output
-raw material and component prices
-energy costs such as world oil,electricity and gas prices
-LABOUR PRODUCTIVITY

Taxes,subsidies,regulations and imported costs:
-VAT,emplyment teaxes
-Changes in size of government subsidies
-corporate taxes,cost of meeting regulations

Supply shocks:
-Natural disaster,drought,flood,civil war all affect real output/GDP

Question 9

In the short run,at least one factor of production is …
Fill in the blank

Answer 9

Fixed