Aggregate Supply Flashcards
(7 cards)
1
Q
How to increase workforce in short run?
A
Longer shifts
Bonuses
2
Q
How to increase long run
A
Better machinery
Training
Education
3
Q
What is the output gap
A
Looking at the actual output and potential output
4
Q
What’s did Keynes argue about long run
A
We can have full employment but market may not always meet equilibrium
5
Q
Why might the as curve shift
A
Labour cost
Exchange rate
Import prices
Tax
6
Q
Why might equilibrium not always meet on long run
A
People may not accept lower wages plus trade unions won’t allow it
7
Q
What is assumed in the short run?
A
Wage rates are fixed
Cannot take on additional workers
