Aggregate supply (OCR A-Level Economics): Flashcards
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Define Short-Run Aggregate Supply (SRAS)
Define Short-Run Aggregate Supply (SRAS)
How much output firms supply in short run at given price level
Define Long-Run Aggregate Supply (LRAS)
Define Long-Run Aggregate Supply (LRAS)
Output economy produces using all factors of production
Shape of SRAS curve
Shape of SRAS curve
Upward sloping
What are 'sticky wages'?
What are 'sticky wages'?
Wages slow to adjust to economic changes
Shape of neo-classical LRAS curve
Shape of neo-classical LRAS curve
Vertical line at full employment output
Who developed Keynesian LRAS theory?
Who developed Keynesian LRAS theory?
John Maynard Keynes
How many segments in Keynesian LRAS?
How many segments in Keynesian LRAS?
Three distinct segments
Keynesian section of LRAS curve
Keynesian section of LRAS curve
Horizontal, spare capacity, high unemployment
Classical section of Keynesian LRAS
Classical section of Keynesian LRAS
Vertical, full capacity, only causes inflation
Which LRAS used predominantly in A-Level exam?
Which LRAS used predominantly in A-Level exam?
Keynesian LRAS curve
What causes SRAS shifts?
What causes SRAS shifts?
Changes in costs of production
Effect of higher wages on SRAS
Effect of higher wages on SRAS
Leftward shift (increased production costs)
What causes LRAS shifts?
What causes LRAS shifts?
Changes in quality/quantity of factors of production
Example of rightward LRAS shift
Example of rightward LRAS shift
Technological advancements
What does 'sticky downwards' mean for wages?
What does 'sticky downwards' mean for wages?
Wages may not fall even when unemployment exists