Long run aggregate supply (LRAS)
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5 Terms
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Keynesian LRAS
The Keynesian view suggests that the price level in the economy is fixed until resources are fully employed.
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Spare capacity
The section of the economy where resources are not fully employed.
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Inflationary
Referring to a situation where an increase in output leads to an increase in the price level.
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Classical LRAS
In the long run, output is fixed at each level and all factors of production in the economy are fully employed.
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LRAS curve
The long-run aggregate supply curve represents the normal capacity level of output of the economy.
Note 
Flashcards (37)