LS4 - LRAS Flashcards
1
Q
Classical LRAS Curve
A
Vertical line representing full/maximum level of output using all FOP.
2
Q
Classical LRAS Curve Shifts
A
If production is unsustainable YFE can shift inwards and if it’s bare sustainable it can still shift outwards.
3
Q
What Causes LRAS To Shift
A
An change in the quality & quantity of FOP and an improvement in the productive efficiency of the economy.
4
Q
Factors Causing LRAS To Shift
A
Change in labour productivity Change in investment Change in infrastructure Change in quantity of labour Competition New Resource Discoveries
5
Q
Keynesian School
A
Agree with classical school on everything other than the shape of the curve.
6
Q
Keynesian Curve
A
Keynesian School believes it’s possible for production levels to change without any change in inflation and eventually they’ll go to a straight line, but there will be times where they’re underemployed.
