Determinants of Short-Run and Long-Run Aggregate Supply (AQA A-Level Economics): Flashcards
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Aggregate supply
Aggregate supply
Total quantity producers willing to supply at different price levels
Two main SRAS determinants
Two main SRAS determinants
Price level and production costs
SRAS curve shape
SRAS curve shape
Non-linear/curved, becomes steeper as output increases
AD increase on flat SRAS section effect
AD increase on flat SRAS section effect
Increased real output with small price rise (reflationary)
Rightward SRAS shift causes
Rightward SRAS shift causes
Lower costs/taxes; higher subsidies, productivity, tech progress
Normal capacity level of output
Normal capacity level of output
Maximum sustainable output at full production potential
LRAS determinants include
LRAS determinants include
Technology, capital/labour quantities, productivity, factor mobility
Vertical LRAS curve view
Vertical LRAS curve view
Free-market view: economy naturally tends towards full employment
Keynesian LRAS curve shape
Keynesian LRAS curve shape
Inverted L-shape (horizontal then upward then vertical)
Stagflation
Stagflation
Higher inflation and lower output (from leftward SRAS shift)