LRAS - video and questions

What does the classical model of aggregate supply include?

• Short run and long run aggregate supply

• Only long run aggregate supply

• Only short run aggregate supply

• Neither short run nor long run aggregate supply

What causes the short run aggregate supply (SRS) to shift to the left?

• Increase in productivity

• Increase in cost of production

• Decrease in cost of production

• Decrease in wages

Which factor is considered a separate cost of production in the UK economy?

• Oil prices

• Raw materials

• Wages

• Business taxes

What does YFE represent in the classical model?

• Yearly Financial Earnings

• Full Employment level of output

• Yearly Fiscal Expenditure

• Financial Economic Equilibrium

What can cause the long run aggregate supply (LRAS) to shift to the right?

• Mass capital depreciation

• Improvement in productive efficiency

• Natural disasters

• Decrease in labor productivity

What is the shape of the Keynesian aggregate supply curve?

• Vertical

• Bendy

• Horizontal

• Upward sloping

According to Keynesian economists, when can the economy produce below the Full Employment level of output?

• Only in the short run

• In both short run and long run

• Never

• Only in the long run

What does a vertical LRAS curve represent in the classical model?

• Variable level of output depending on price level

• The economy's inability to reach full employment

• Constant level of output regardless of price level

• The economy's potential output at full employment

What happens to the Keynesian AS curve as it approaches the Full Employment level of output?

• It becomes horizontal

• It remains bendy

• It becomes downward sloping

• It becomes vertical