Aggregate Supply

Question 1

what is aggregate supply

Answer 1

the potential output of all goods and services that are produced within an economy over a period of time

Question 2

what can cause a contraction or expansion of AS

Answer 2

utilising more of the existing FoP

Question 3

what causes a shift in the SRAS

Answer 3

• changes in costs of raw materials + energy
• changes in exchange rate
• changes in tax rate

Question 4

what are the two forms of LRAS

Answer 4

keynsian and classical

Question 5

what causes a shift in the LRAS

Answer 5

change in the quality/quantity of the the FoP

Question 6

what is the full employment output

Answer 6

when an economy fully utilised all of its FoP

Question 7

what happens at full employment

Answer 7

• high business and consumer confidence
• low unemployment rate
• low saving from households

Question 8

what happens at low employment

Answer 8

• high unemployment
• low business/consumer confidence
• low inflation rates

Question 9

how is actual economic growth shown on a LRAS graph

Answer 9

shift in AD

Question 10

how is potential economic growth shown on a LRAS curve

Answer 10

shift in LRAS