15 Aggregate Supply

15 Aggregate Supply

1. The total amount of goods and services that all industries in the economy will produce at every given price level

2. SRAS

   • Wage
   • Cost of Raw Material
   • Price of Imports
   • Government Policies

3. LRAS

   • Perfectly inelastic at full employment level of output
   • New Classical
   • Keynesian

4. Supply-side Policies

   • Interventionist
     • 1. Investment in human capital
     • 2. Research and Development
     • 3. Provision and maintenance of infrastructure
     • 4. Direct support for businesses/ Industrial policies
   • Market-based
     • 1. Reduce income tax
     • 2. Reduce corporate tax
     • 3. Labour market reform
       • Reduce trade union power
       • Reduce minimum wage
       • Reduce unemployment benefits
     • 4. Deregulation
     • 5. Privatisation
     • 6. Policies to increase competition

5. The increase of QUALITY or QUANTITY of the factors of production

6. Shift in LRAS is like a shift in PPC