Long Run AS 2.3.3

Question 1

LARAS

Answer 1

In the long run, there will be a limit on how much supply can be increased. There is a limit on the number of people and machinery that are available once labour productivity is maximized.

Question 2

how does Technological advances cause a shift in the LRAS.

Answer 2

better tech can reduce costs. also better tech will cause more production, more things will be produced.

Question 3

how does changes in the relative productivity cause a shift in the LRAS.

Answer 3

the more productive the economy is, the more will be produced. if the UK is more productive than other countries it will encourage production of that good in the UK, so investments will increase and this will increase LRAS.

Question 4

how does changes in education and skills cause a shift in the LRAS.

Answer 4

A more skilled workforce will be more employable and work quicker and more efficiently with in their jobs, so the output per workers will increase causing a shift in the LRAS.