LRAS Flashcards
1
Q
define short run
A
spare capacity exists in the economy
2
Q
define long run
A
no spare capacity exists in the economy
3
Q
define consumer confidence
A
a measure of consumers feelings about current and future economic conditions used as a indicator of overall state economy
4
Q
define long run economic growth
A
increase in economy’s capacity from 1 year to the next
5
Q
benefits of economic growth
A
- higher living standards
- employment effects
- fiscal dividends
- accelerator affect
6
Q
cost of economic growth
A
- risk of higher inflation and interest rates
- environmental affects
- inequalities of income and wealth
7
Q
factors shifting out Lras
A
- increase in quantity and quality of capital equipment
- highly skilled workforce
- innovation of improvements in productive processes
- factor mobility
- improved attitudes of entrepreneurship
