2.3.3 Long-run AS

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8 Terms

1
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what are the factors affecting LRAS?

  • technological advances.

  • competition policy.

  • changes in education and skills.

  • demographic changes and migration.

  • changes in government regulations.

  • changes in relative productivity.

2
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what is the positive impact of technological advancements on LRAS?

  • technological improvements increase productivity, allowing more output from the same labour/capital.

3
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what is the positive impact of changes in relative productivity on LRAS?

  • increases in productivity in one sector relative to others can shift resources, optimizing the overall efficiency of the economy.

4
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what is the positive impact of changes in education and skills on LRAS?

  • a more educated and skilled workforce can produce more output and adapt to new technologies, enhancing LRAS.

5
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what is the positive impact of changes in government regulations on LRAS?

  • deregulation can lead to increased efficiency.

6
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what is the positive impact of demographic changes and migration on LRAS?

  • increased population means that there’s more workers available to join the labour force so LRAS shifts rightward.

7
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what is the positive impact of competition policy on LRAS?

  • policies that promote competition can lead to more efficient markets and higher productivity.

8
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what is long run aggregate supply (LRAS)?

  • LRAS is influenced by a change in the productive capacity of the economy

    • productive capacity is changed by changes to the quantity or quality of FOP