Aggregate Supply

12 flashcards · Economics · by Addaneye

1. Aggregate supply definiton

   Total planned output at a given time, price and within an economy.

2. What are the two types of aggregate supply in the classical model?

   Short-run and long-run

3. Are factors of production fixed or variable in the short run?

   Fixed

4. What is the position of short-run aggregate supply determined by?

   Costs of production in the economy

5. What are some costs of production?

   Wages Raw materials/commodity prices Oil price Business taxes Import prices (wpidec/spiced)

6. What are supply side shocks?

   Sudden unexpected events that affect the costs of production

7. Are factors of production fixed or variable in the long run?

   Variable

8. What is yfe?

   Full employment level of output

9. What does yfe represent?

   The maximum level of output than an economy can produce when it uses all factors of production at sustainable levels

10. Factors causing shifts in SRAS (4)

    Changes in cost of raw materials Changes in level of international trade Changes in tax rates Changes in exchange rates

11. Factors causing shifts in LRAS (7)

    Technological advances Changes in relative productivity Changes in education and skills Demographic changes and migration Competition policy and regulation changes Changes in minimum wage

12. Factors causing shifts in LRAS (7)

    Technological advances Changes in relative productivity Changes in education and skills Demographic changes and migration Competition policy and regulation changes Changes in minimum wage