3.2 Short-Run Aggregate Supply Flashcards
(5 cards)
1
Q
What is SRAS?
A
Relationship between planned national output (GDP) and the GPL
2
Q
Causes of shifts in SRAS?
A
1) Change in resource prices
2) Business costs
3) Cost of imports
4) Supply shocks
3
Q
External factors affecting SRAS?
A
1) World prices
2) Trade barriers
4
Q
View of Keynesians?
A
1) Do not see difference between SRAS and LRAS
- Wages sticky downwards
- Trade-off between inflation and employment
- Markets don’t work perfectly
5
Q
View of Neoclassicalists?
A
1) Distinguish between SRAS and LRAS (on same diagram)
- Markets can repair themselves
- Only trade-off between inflation and employment in the short-run
