long run aggregate supply

Question 1

what is the acronym for long run aggregate supply

Answer 1

LRAS

Question 2

what is long run aggregate supply

Answer 2

shows the productive capacity of an economy when it is possible to vary all current resources

Question 3

does the LRAS represent the maximum or minimum possible output

Answer 3

maximum possible output - when all factors of production are fully and efficiently employed

Question 4

what causes a shift in LRAS

Answer 4

a change in the quantity or quality of FoPs (CELL)

Question 5

what are the 5 main factors affecting LRAS

Answer 5

• productivity of labor and capital
• population and labor market
• stock of natural resources
• past level of investment
• efficiency of the mix of FoP’s

Question 6

what is productivity of labor and capital

Answer 6

the amount of output each unit of labor of land can produce

Question 7

what is population of labor market

Answer 7

the number of those working and the proportion of those old enough to work who are working

Question 8

what is stock of natural resources

Answer 8

what are the natural resource endowments in an economy

Question 9

what is past level of investment

Answer 9

the size of capital stock. The amount of domestic land inward foreign investment a country is making and receiving

Question 10

what is efficiency of the mix of FoP’s

Answer 10

does the economic system encourage an efficient use if the current economic resources - is the market used effectively? are market failures accounted for by the government?

Question 11

what are the 5 policies that can increase LRAS

Answer 11

• encourage private sector investment
• improve a countries investment
• attract skilled workers to a country
• educate/train the current and future workforce
• encourage market efficiency and increase productivity