Flashcards
Aggregate Supply
Cards in this deck (22)
- 1What does the AS curve show? (2)The level of output in the whole economy at any given level of average proves
How and why firms in an economy may increase or decrease these factors - 2What is then SRAS?Total value of what we can produce
- 3Why is the AS curve upwards sloping?•Slopes upwards as firms will need an incentive to increase their outputs
- 4What assumption does the SRAS rely on ?Assumption: money wage rates and the price of other factory input are fixed when prices rise
- 5Why leads to a movement along the SRAS?A change in the price level brought about by a shift in Aggregate Demand
- 6What do we see when AD rises?An expansion in SRAS
- 7What do we see when AD fallsAn contraction in SRAS
- 8What can cause changes to SRAS?Business Costs
- 9Give examples of what can change SRAS ?(5)Changes in wage rates
Changes in raw material prices
Changes in cooperation tax
Changes in subsidies
Technological improvement - 10What do we assume in LRAS?Aggregate supply is independent of the price level
- 11What does the LRAS represent?Our productive capacity not our actual output
- 12What are we saying when we draw the LRAS vertical?There is a maximum level of physical output that the economy can produce, like the PPF
- 13What is the position of the LRAS curve determined by?By the availability and quality of factors of production
- 14Give examples of examples of what change change the position of the LRAS curve?Capital- how much and how efficient machinery is
Labour- how many and how productive workers are
Land- how much and how good at growing things
Entrepreneurship- level of risk taking - 15What happens at low output on the SRAS curve?Increase of price level leads to high incentive for firms to produce more
- 16What happens at high output on the SRAS curve?Same increase of price level will not lead ro as big of change because of SCARCITY
- 17SRAS- What would happen if governments increase the minimum wage?Firms costs increase- paying more for workers
Costs rise, produce less
Decrease in National output - 18SRAS- What would happen if the general price level increases due to inflation?Movement along curve
Increase in National Output from Y1-Y2 - 19SRAS- What would happen if governments reduced VAT?Cheaper for firms to produce more
Shift outwards in National Output - 20SRAS- What would happen if there was a rise in FOP ?More factors of production- Cheaper to produce
Shift outwards - 21What would a shift outwards of LRAS show?Increase in availability of Factors of Production
- 22What is yf and when do we use it?National output at full employment of resources
(How much an economy can make if all resources are employed)
LRAS
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- A-Level Economics Macrp (AS) Flashcards on Aggregate Supply , created by Maya Khangura on 23/02/2016.
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- Maya Khangura
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