2.3 Aggregate supply (AS)

Question 1

What is AS

Answer 1

potential output of all goods and services aree produced with an economy over a period of time

Question 2

What are the two types of AS

Answer 2

Long run or short run

Question 3

Long run vs short run

Answer 3

SR - one factor of production is fixed
LR - All factors of production are variables

Question 4

Why is one factor fixed in SRAS

Answer 4

Firms cannot change the facots of production in SR

Question 5

What can firms can do to alter supply with movments

Answer 5

Utilize more of each factor of production that they already have. contractions or extension

Question 5

How can SRAS shift

Answer 5

alter intentity of utilization
external factors like exchange rate
taxes or raw material costs (as they change cost of production)

Question 6

What are the two types of LRAS

Answer 6

Classical or keynes

Question 7

Explain classical LRAS

Answer 7

Assumes that LR is always at full employment. Everyone who wants to work is working.
economy is self-correcting and doesnt need goverment help.Chek notes

Question 8

Explain keynes LRAS

Answer 8

More elastic at the begining and then becomes elastic.Check notes

Question 9

What makes LR shift

Answer 9

CELL increases in either quality or quantity

Question 10

What does potential growth curve represnt

Answer 10

represented an inc in productive capacity of an economy