Topic 2.10 - Long run aggregate supply (LRAS)
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7 Terms
What is LRAS?
The maximum possible level of supply in the economy where all resources are fully employed
What does LRAS show?
Limit to production
When does LRAS shift out?
When there is an improvement in the quantity/quality of resources
In the long term what does increased immigration lead to?
More workers and more possible production
What are the 7 LRAS factors that either increase or improve resources?
Technological advances
Changes in relative productivity
Changes in education and skills
Changes in government regulations
Demographic changes and migration
Competition policy
What are the 2 interpretations of the shape of the LRAS?
Neo classical (free market)
Keynesian
What are the 3 sections on the Keynesian LRAS curve?
LRAS is horizontal - perfectly inelastic
LRAS becomes steeper - More inelastic
LRAS is vertical - Perfectly inelastic
Note 
Flashcards (40)