Aggregate Supply Basics
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Questions and Answers

What tends to be more stable and doesn't change as much as the short-run curve?

  • Maximum amount of stuff businesses can make
  • Interest rates
  • Short-run curve
  • Long-run curve (correct)

In the short run, how can businesses make more lemonade?

  • By buying a better lemon squeezer
  • By investing in new technology
  • By working faster or hiring more people (correct)
  • By using fresher lemons

What helps economists and policymakers figure out how to manage inflation?

  • Government spending
  • Maximum amount of stuff businesses can make
  • Understanding aggregate supply and its curves (correct)
  • Short-run aggregate supply curve

Why do businesses adjust in the long run?

<p>To make even more stuff (B)</p> Signup and view all the answers

What is the main purpose of the short-run aggregate supply curve?

<p>Show how much stuff businesses can make using current resources (A)</p> Signup and view all the answers

How does understanding aggregate supply and its curves influence decision-making by economists and policymakers?

<p>Leads to better decisions on managing inflation (D)</p> Signup and view all the answers

What does the Aggregate Supply (AS) concept refer to?

<p>The total amount of goods and services all factories and businesses in a country can produce (B)</p> Signup and view all the answers

How are factories' production decisions influenced by prices according to the text?

<p>High prices may lead to increased production (D)</p> Signup and view all the answers

What factor influences the Short-Run Aggregate Supply (SRAS) curve going up?

<p>Easy availability of workers for hiring (A)</p> Signup and view all the answers

What is the Long-Run Aggregate Supply (LRAS) curve indicative of?

<p>The total production capacity over a longer period (D)</p> Signup and view all the answers

What role does the availability of workers play in influencing the Short-Run Aggregate Supply (SRAS) curve?

<p>It impacts how much stuff businesses are willing to produce in the short term (B)</p> Signup and view all the answers

How do high prices affect factories' production according to the text?

<p>May lead to increased production due to higher profits (A)</p> Signup and view all the answers

Flashcards

Long-Run Curve

Aggregate supply over a longer time; more stable than short-run.

Short-Run Production

Increasing production by using existing resources more intensively.

AS Curves' Impact

Understanding AS curves aids in better inflation control strategies.

Long-Run Business Adjustments

Adjustments made to increase overall production capacity.

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Short-Run AS Curve

Illustrates production capacity using current resources available.

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AS and Policymaking

Influences strategies to manage and control inflation.

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Aggregate Supply (AS)

Total output of goods/services a country's businesses can produce.

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Price Impact on Production

Higher prices incentivize increased factory output.

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Worker Impact on SRAS

Increased willingness to produce.

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Long-Run AS Curve (LRAS)

Total possible output over an extended period.

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Labor & SRAS Curve

Affects businesses short term production decisions.

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High Prices / Production

Factories may increase production.

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