Circular flow of income and AD/AS

Question 1

Define Aggregate Supply and Demand

Answer 1

The total value of goods and services bought or sold in an economy.

Question 2

Define LRAS

Answer 2

Long Run Aggregate Supply: The productive potential of an economy in the long term

Question 3

What factors can influence AD

Answer 3

Consumer confidence
Immigration
Injections of government spending
Higher rates of investment
Improving trade balance

Question 4

What Factors can affect SRAS

Answer 4

Anything affecting Cost of Production:
Commodity prices
Energy prices
Wage rates such as NMW or NLW
Higher nationwide rent prices
Interest rates on variable mortgages and loans

Question 5

What factors can affect LRAS

Answer 5

Anything affecting factor of production quality:
Better education and training
Infrastructure investment
Freer access to natural resources
Cutting red tape on construction/mining/foresting