relationship between LRAS and SRAS

• what is the short run?

  period of time when at least one factor of production is fixed and cannot be changed.
• what happens in the short run on the AS curve?

  money wage rates, factor prices (prices of the factor of production) and the state of technology are fixed and can’t change

  change in these results in a shift of the curve
• what happens in the long run?

  all factors of production are variable, disagreement amongst economists on the shape of the LRAS.
• what is LRAS influenced by?

  change in the productive capacity of the economy
• what happens when productive capacity changes?

  equivalent to a shift inwards/outwards of the production possibilities frontier (PPF)
• what does long term economic growth mean?

  requires the productive capacity to increase