2.3 Aggregate Supply

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7 Terms

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Aggregate Supply

the total amount of goods and services firms are willing to produce at a given price level

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Classical school

refer equilibrium level of output as the natural rate of output

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keynesian school

economists that believed the macroeconomy could settle at an equilibrium that was below full employment

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factors affecting SRAS

  • production costs

  • exchange rates

  • expectations

  • government regulations/policies

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factors of LRAS

  • productivity

  • technological advancements

  • labor force size and quality

  • government policies

  • natural resources

  • investment in new capital goods

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Key difference between SRAS and LRAS?

SRAS is influenced by changes in price level whereas LRAS assumed to be independent of the price level. SRAS refers to a short period where factors of production are fixed, whereas LRAS considers the long term impact of changes in quantity and quality of all factors of production.

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What is Q2CELL?

quantity, quality, capital, enterprise, land, labor