AS Flashcards
1
Q
AS
A
The amount that all firms in the economy are willing to supply at various price levels
2
Q
When prices rise
A
Firms are generally willing to supply more but there comes a point where firms reach max. capacity (full employment)
3
Q
If costs of production rise
A
There will be a shift to the left (AS decreases)
4
Q
Spare capacity
A
Where three are unemployed resources in an economy
5
Q
Keynesian approach
A
Economy can be at equilibrium and still have spare capacity
6
Q
Classical approach
A
If there is spare capacity in an economy it cannot be at equilibrium
7
Q
Shifts in SRAS (4)
A
- Change in costs of raw materials
- Change in level of international trade
- Change in exchange rates
- Change in tax rates
8
Q
Shifts in LRAS (7)
A
- Technological advances
- Relative productivity changes
- Education and skills changes
- Demographic changes & migration
- Competition policy & regulation changes
- Changes in minimum wage
- Changes in tax and benefit system
