Cards (41)

    • What does Long-Run Aggregate Supply (LRAS) represent?
      Potential output
    • The LRAS curve is vertical on a supply-demand graph.
    • Match the resource factor with its description:
      Land ↔️ Natural resources
      Labor ↔️ Workforce size and productivity
      Capital ↔️ Physical resources
    • How do technological advancements affect LRAS?
      Shift it to the right
    • The introduction of automation in manufacturing increases labor productivity.

      True
    • Technological advancements such as automation enhance an economy's productive capacity
    • Match the factors affecting LRAS with their impacts:
      Capital ↔️ Increases with investment in physical capital
      Labor ↔️ Rises with growth in labor force size and productivity
      Natural Resources ↔️ Expands with discovery or improved access
      Technology ↔️ Shifts LRAS rightward with innovations
    • LRAS is independent of the price level and reflects the economy's potential output.
    • What shape is the LRAS curve on a supply-demand graph?
      Vertical
    • Steps in the process of technological advancements affecting LRAS:
      1️⃣ New technologies are developed
      2️⃣ Firms adopt new technologies
      3️⃣ Productivity increases
      4️⃣ LRAS shifts to the right
    • A decline in the quality of natural resources would shift the LRAS curve to the left.

      True
    • Changes in price level affect LRAS.
      False
    • What is the key difference between LRAS and SRAS?
      Price independence
    • An increase in the quality of labor shifts the LRAS curve to the right.

      True
    • Technological advancements allow firms to produce more output using the same amount of inputs.
    • How has the introduction of robotics and artificial intelligence in manufacturing affected LRAS?
      Expanded the LRAS
    • New technologies shift the LRAS curve to the right because firms can produce more output with the same inputs.
      True
    • What determines an economy's LRAS in the long run?
      Fundamental resources and technology
    • Improved education and training of the workforce increase labor productivity and shift LRAS to the right.

      True
    • What does the LRAS curve signify about output at full employment?
      Fixed output regardless of price
    • The discovery of new oil or mineral deposits expands the availability of land resources, shifting LRAS rightward.
    • How do technological advancements enhance LRAS?
      Increase productive capacity
    • Technological advancements can lead to faster and more significant increases in LRAS compared to resource availability.

      True
    • Match the aspects of institutional changes with their impacts on LRAS:
      Legal System ↔️ Increases business confidence, encourages investment
      Regulatory Environment ↔️ Reduces compliance costs, promotes innovation
      Property Rights ↔️ Incentivizes long-term investment
    • The efficiency and transparency of regulations in a regulatory environment reduce compliance costs
    • Improvements in the legal system that make contracts easier to enforce can shift the LRAS curve to the right.

      True
    • What are institutional changes defined as?
      Shifts in legal systems
    • What does human capital refer to in the context of LRAS?
      Knowledge, skills, and abilities
    • How does lifelong learning contribute to LRAS?
      Maintains an adaptable workforce
    • How does investment in physical capital affect LRAS?
      Higher capital stock boosts productivity
    • Technological progress enhances efficiency and output potential, shifting the LRAS curve to the right.
      True
    • The introduction of robotics in manufacturing has increased productivity and shifted LRAS to the right.
    • What are institutional changes in a country's legal system, regulatory environment, and property rights systems?
      Fundamental shifts
    • What is the primary impact of a clear and enforced legal system on LRAS?
      Increases business confidence
    • How do secure property rights affect long-term investment and development?
      Incentivize investment
    • The impact of institutional changes on LRAS is linked to macroeconomic policies aimed at fostering economic growth
    • A clear and enforced legal system reduces business uncertainty and encourages investment.

      True
    • Improving access to and quality of education increases labor productivity
    • Order the key determinants of LRAS according to their impact on economic growth:
      1️⃣ Capital
      2️⃣ Labor
      3️⃣ Natural Resources
      4️⃣ Technology
    • Greater availability of natural resources enables increased production