The Role of Aggregate Supply (HSC SSCE Economics): Flashcards
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Practise the cards
10 cards from this deck
Aggregate supply
Aggregate supply
Total goods & services an economy can produce
Four factors of production
Four factors of production
Natural resources, labour, capital, entrepreneurship
Two benefits of increased aggregate supply
Two benefits of increased aggregate supply
Higher output (GDP) & lower price level
Economic potential
Economic potential
Maximum sustainable output with current resources
Capacity constraints
Capacity constraints
When demand exceeds economy's production ability
Three problems from capacity constraints
Three problems from capacity constraints
Inflation, skills shortages, infrastructure bottlenecks
Effect of population growth on AS
Effect of population growth on AS
Expands labour force, increases production capacity
How technology adoption affects AS
How technology adoption affects AS
Reduces production costs
Target of microeconomic policies
Target of microeconomic policies
Aggregate supply
Examples of supply-side policies
Examples of supply-side policies
Immigration, education, infrastructure, reform, R&D