AS is the total quantity of output firms will produce and sell at a given price level.
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what is the differnce between short run/long run?
short run=one factor of production fixed and long run all factors of production are variable
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what is a supply side shock?
a supply sode shock is anything positve or negative that causes SRAS to change.
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why does movement occur on SRAS?
because of general price level
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what causes shifts in SRAS?
business costs, exchamge rates and gov imposing taxes
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what is LRAS?
Underlying economic growth is shown by a rightward shift in the long-run aggregate supply curve (LRAS). This represents an increase in the productive capacity of the economy.
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what are LRAS factors?
A right shift shows productivity growth.
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what could productivity mean?
output per unit of labour (per worker)
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what are the other LRAS factors?
technology, infrastructure, enterprise and cultural attitudes, factor mobility and economic incentives
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what does the ntersection between AS and AD show?
it shows the equlibrium price level and real GDP of the economy
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Other cards in this set
Card 2
Front
what is the differnce between short run/long run?
Back
short run=one factor of production fixed and long run all factors of production are variable
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