Shifts in ID
Cost of
production: lower cost shift right, high cost shift left
Business
taxes: Lower business taxes shift ID right high tax shift left
Technological
Change: New technology shifts ID right no change shift left
Stock
of capital: low on capital shift right, high capital shift left
Expectations:
positive shift right, negative shift left
Long run Aggregate supply
LRAS
represents a point on an economy’s production possibilities curve, it is a
vertical line at an output level that represents the quantity of goods and
services a nation can produce over a sustained period using all of its
productive resources as efficiently as possible. It is always at full
employment it does not change as price level changes. It shifts outward if
there is a change in technology, resource, or if there is some economic growth.
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