Aggregate Supply

Question 1

Define aggregate supply

Answer 1

the total quantity of goods and services that businesses within an economy are willing and able to supply at a given general price

Question 2

What does Short-Run mean

Answer 2

In the short run, it is assumed that money wage rates and the factors of production (CELL) are fixed

Question 3

What does Long-Run mean

Answer 3

In the long run, all factors of production (CELL) are variable and can be increased sustainably

Question 4

True or False, are SR and LR time periods?

Answer 4

False

Question 5

What leads to movements along the SRAS curve

Answer 5

Price changes

Question 6

Name some factors that would shift SRAS

Answer 6

• A change in the costs of production
• Changes in tax rates
• Changes in exchange rates
  (these shift LRAS both left and right)

Question 7

What are the factors shifting LRAS

Answer 7

Q2CELL and productive efficiency

Question 8

what are some influences on LRAS

Answer 8

• technological advancements
• changes in relative productivity
• changes in government regulation
• demographic changes and migration
• competition policy
• changes in education and skills

Question 9

What does YFE represent

Answer 9

Maximum capacity, full employment

Question 10

What line is the Classical LRAS curve

Answer 10

Vertical line

Question 11

What line is the Keynesian LRAS curve

Answer 11

horizontal curving to vertical (an actual curve)

Question 12

What are the three sections of Keynesian LRAS

Answer 12

1. spare capacity
2. rising growth, employment
3. maximum capacity

Question 13

If AD shifts on the vertical of the Keynesian LRAS curve, what does it cause

Answer 13

inflationary pressure