Aggregate Supply Concepts

This set of flashcards covers key concepts related to Short-Run and Long-Run Aggregate Supply, including factors that shift SRAS and LRAS.

What happens to the Short-Run Aggregate Supply (SRAS) when wages increase?

SRAS shifts LEFT.

List one factor that causes the Long-Run Aggregate Supply (LRAS) to shift RIGHT.

Labor force increases.

How is the Long-Run Aggregate Supply (LRAS) characterized at potential GDP?

LRAS is vertical.

When does the SRAS shift LEFT in terms of input prices?

When input prices increase.

What is the relationship between an inflationary gap and wages?

In an inflationary gap (Y > Y), wages rise, shifting SRAS LEFT.

What effect does improving infrastructure have on LRAS?

It causes LRAS to shift RIGHT.

What happens to SRAS when there is a recessionary gap?

Wages fall, shifting SRAS RIGHT.

What causes LRAS to shift RIGHT related to capital?

An increase in capital stock.

What shift occurs in SRAS if productivity decreases?

SRAS shifts LEFT.

Identify one reason why LRAS might shift RIGHT related to technology.

An increase in technology.