Classical Vs Keynesian

Question 1

What affects SRAS

Answer 1

Costs of production
Increase in costs of production shifts SRAS left
Decrease in costs of production shifts SRAS right

Question 2

Costs of production
Supply side shocks

Answer 2

Wages
Raw materials
Oil prices
Business taxes
Import prices

Question 3

Import prices (CoP)

Answer 3

Import prices dependent on exchange rate
Weak exchange rate = increased import prices
Strong exchange rate = decreases import prices

Question 4

What affects LRAS

Answer 4

Anything that effects the quality or quantity of factors of production
Increase leads to an increase in LRAS
decrease leads to a decrease in LRAS
Improvement in productive efficiency

Question 5

Factors of production effect

Answer 5

Labour productivity
Investment
Infastructure
Quantity of labour ( immigration)
Competition
New resources