4.2.2.6 Determinants of long-run aggregate supply NOTES

What does technological advancement contribute to in terms of Long-Run Aggregate Supply (LRAS)?

• Has no impact on LRAS

• Decreases the quality of output

• Reduces the quantity of output

• Enhances both the quantity and quality of output

How does productivity improvement affect Long-Run Aggregate Supply?

• Reduces the potential for innovation

• Enhances both the quantity and quality of output

• Decreases the efficiency of production

• Only increases the quantity of output

What role do attitudes and entrepreneurship play in LRAS?

• They reduce the types of goods and services produced

• They decrease the quality of goods and services

• They have no significant impact

• They contribute by prioritizing quality and innovation

What is the effect of factor mobility on LRAS?

• Limits the expansion of capital stock

• Decreases the economy's productive capacity

• Enhances both the quantity and quality of factors

• Increases only the quantity of factors like labor and capital

How do economic incentives impact LRAS?

• They have no impact on the quality of factors of production

• They reduce the economy's productive capacity

• They promote investments in both the quality and quantity of factors

• They discourage investments in technology and human capital

What does the vertical LRAS curve represent?

• The economy's dependency on price levels

• The economy's fluctuating output level

• The economy's minimum potential output level

• The economy's maximum potential output level

What crucial role does the banking system play in LRAS?

• Providing funding for research and development

• Decreasing funding for infrastructure projects

• Allocating resources to non-essential investments

• Limiting financial resources for education

How do government policies influence LRAS?

• By promoting investments in quality and quantity of production factors

• By discouraging education and skills training

• By reducing infrastructure investments

• By incentivizing outdated technological methods

What is the impact of a supportive regulatory framework on LRAS?

• It discourages protection of intellectual property

• It promotes investments in innovation and technology

• It reduces competition in the market

• It encourages monopolistic practices

What does the Keynesian AS curve consider in its analysis?

• Neither the quantity nor the quality of factors of production

• Both the quantity and quality of factors of production

• Only the quality of factors of production

• Only the quantity of factors of production