Keynesian Long Run Aggregate Supply

Question 1

John Maynard Keynes

Answer 1

was a British economist who developed a theory of long run aggregate supply

Question 2

theory

Answer 2

states that when an economy is depressed, it does not use the factors of production (land, labor, capital, management) to their fullest potential, which means that production levels can rise or fall without any change in average prices. however, he suggests that there is a breaking point at which the economy will shift into high gear and increase prices while output levels remain the same

Question 3

what should happen when the need for output increases

Answer 3

hiring of employees should increase

Question 4

as more items are being made, what happens to prices

Answer 4

prices increase

Question 5

third part of the LRAS curve is vertical. this corresponds to what point on the PPF model?

Answer 5

full employment

Question 6

how many “parts” make up the LRAS curve

Answer 6

three

Question 7

reason that a ceiling exists on efficiency

Answer 7

factors of scarcity

Question 8

true

Answer 8

we are more efficient

Question 9

increase in GDP causes what

Answer 9

increase in aggregate price