Long Run Aggregate Supply

Define the long-run aggregate supply curve

• The LRAS curve corresponds to the PPC because they both represent maximum sustainable capacity

• The LRAS corresponds to the PPC because they both use land, labor, and love

• Kindness is my number one value

Tags

2.F

2.F.1

Why is the LRAS curve vertical?

• In the long run wages and prices fully adjust

• In the long run prices are infinite

• In the long run, we're all dead

• In the long run wages don't equal productivity.

What causes the LRAS to shift (select all)

• Changes in productivity

• Changes in quality and quantity of the factors of production

• It happens by itself if we just wait

• Demanding higher wages

Tags

Mod-2

Mod-2.f

The long-run aggregate supply curve is vertical because in the long run:

•   technological progress outpaces raises in nominal wages.

•   all factors of production increase.

•   the price of labor is flexible, while the price of physical capital is fixed.

• all prices are flexible.

Long-run Aggregate Supply

• The timeframe when price levels, wages, and contacts can adjust to the changes in the economy

• The timeframe when prices levels, wages and contracts do not adjust to the changes in the economy

• When nominal wages are slow to rise of fall in response to changes in the economy

• Level of real GDP if all prices an wages were fully flexible and efficient

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run. reduce immigration from abroad make trade more open between the US and other countries.

• and 2 both shift long-run aggregate supply right.

• and 2 both shift long-run aggregate supply left.

• shifts long-run aggregate supply right, shifts long-run aggregate supply left.

• shifts long-run aggregate supply left, shifts long-run aggregate supply right.

Which of the following is correct?

• The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.

• The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.

• The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables.

• Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

• in the price level and real GDP.

• in the price level, but not real GDP.

• in real GDP, but not the price level.

• in neither the price level nor real GDP.

What is the primary factor that determines the position of the Long Run Aggregate Supply (LRAS) curve?

• A) The level of technology and resources available

• B) The current inflation rate

• C) The level of consumer confidence

• D) The current interest rates

Which of the following would cause a rightward shift in the LRAS curve?

• A) An increase in the labor force

• B) A decrease in consumer spending

• C) An increase in taxes

• D) A decrease in government spending