AS

• define aggregate supply


  total amount of supply in the economy as a whole
• why does the SRAS curve slope upwards

  as prices rise the profit incentive increases so firms are more willing to supply
• why does the SRAS curve slope upwards

  as prices rise the profit incentive increases so firms are more willing to supply
• how can commodities affect SRAS

  an increase in commodity price causes SRAS to fall as the profit incentive falls
• how can wage rates affect SRAS

  falls in wages is a fall in costs so SRAS increases
• how does productivity affect SRAS


  increases in productivity means labour costs fall increasing the profit incentive and therefore increasing SRAS
• how does VAT effect SRAS

  a larger portion of profit go to the government reducing the profit incentive at every price level so SRAS falls
• what does the LRAS curve represent

  the total amount of output an economy can produce in the long run given the amount of resources
• why are a PPD and LRAS curve similar 


  the factors that cause shifts in one cause shifts in the other
• how does increased investment increase LRAS

  additional capital good mean increased production is capable
• what changes to the workforce can increase LRAS

  -increased size

  -increased education/training - allows for increased production
• how can infrastructure affect LRAS

  better infrastructure means resources can move easier reducing cost and allowing more output
• what can cause a fall in LRAS

  -war/ natural disaster reduces output

  -investment failing so low capital goods are worn out so output decreases

  -a fall in the size of working population
• what is the keynesian AS curve


  it combines the SRAS and LRAS curves

  
• what happens to price levels as output changes on a Keynesian AS curve

  -low output leads to little increases in price level due to spare capacity

  -at medium output both output and price changes

  -at the LRAS point output cannot change and only price level can caneg

  the curve can shift left or right best on resource availability