Long-Run Aggregate Supply (LRAS) - AP Macroeconomics
- How does a significant increase in foreign investment affect LRAS?
- Shifts LRAS to the right. Capital inflows increase investment and productive capacity.
- What is the role of natural resources in determining LRAS?
- More resources shift LRAS right. Greater availability of inputs increases productive potential.
- Identify the shape of the LRAS curve.
- Vertical line. Output is fixed regardless of price level changes.
- Which factors can shift the LRAS curve?
- Technology, labor, capital, resources. These determine the economy's productive capacity and efficiency.
- What does the Long-Run Aggregate Supply (LRAS) curve represent?
- Potential output of an economy at full employment. Shows maximum sustainable output when all resources are fully utilized.
- What is the long-run effect of increased immigration on LRAS?
- Shifts LRAS to the right. More workers expand the total labor force available.
- Identify the effect of a long-term decline in birth rate on LRAS.
- Shifts LRAS to the left. Fewer future workers reduces long-term labor supply.
- What is the effect of increased entrepreneurship on LRAS?
- Shifts LRAS to the right. More business creation increases innovation and efficiency.
- What is the effect of increased productivity on LRAS?
- Shifts LRAS to the right. Higher output per worker increases total potential production.
- How does a long-run decrease in investments impact LRAS?
- Shifts LRAS to the left. Less capital formation reduces future productive capacity.
- What impact does an increase in labor productivity have on LRAS?
- Shifts LRAS to the right. Higher output per worker increases total potential production.
- What economic concept is represented by the vertical LRAS?
- Full employment output. The level where unemployment equals the natural rate.
- How does an increase in capital goods impact LRAS?
- Shifts LRAS to the right. More tools and machinery increase productive capacity.
- How does a decrease in labor participation affect LRAS?
- Shifts LRAS to the left. Fewer available workers reduces total productive capacity.
- What impact does a higher retirement age have on LRAS?
- Shifts LRAS to the right. Workers remain productive longer, expanding labor supply.
- What does a leftward shift in the LRAS curve indicate?
- Decrease in potential output. Economy's productive capacity has declined permanently.
- Identify the impact of a labor strike on LRAS.
- No immediate effect on LRAS. Temporary disruption doesn't change long-run productive capacity.
- What happens to LRAS when there is a decrease in resources?
- Shifts LRAS to the left. Fewer inputs reduce the economy's total productive capacity.
- How does better healthcare affect LRAS?
- Shifts LRAS to the right. Healthier workforce is more productive and works longer.
- Identify the effect of an increase in educational attainment on LRAS.
- Shifts LRAS to the right. More skilled workers increase overall productivity.
- What is the long-run effect of an increase in investment on LRAS?
- Shifts LRAS to the right. Creates capital that permanently increases productive capacity.
- What is the effect of a natural disaster on LRAS?
- Shifts LRAS to the left. Destroys productive capacity and reduces available resources.
- How does an increase in capital stock affect the LRAS?
- Shifts LRAS to the right. Additional machinery and equipment boost productive capacity.
- How does technological advancement affect the LRAS curve?
- Shifts it to the right. Improves productivity and increases potential output permanently.
- What is the effect of an aging population on LRAS?
- Potentially shifts LRAS to the left. Older workers may be less productive and retire sooner.
- What is the effect of improved research and development on LRAS?
- Shifts LRAS to the right. Innovation creates new technologies that boost productivity.
- What happens to LRAS if there is an improvement in infrastructure?
- Shifts LRAS to the right. Better infrastructure enhances productivity across the economy.
- State one impact of an increase in the labor force on LRAS.
- Shifts LRAS curve to the right. More workers available increases total productive capacity.
- How does a long-term increase in tariffs affect LRAS?
- Potentially shifts LRAS to the left. Trade barriers reduce efficiency and resource allocation.
- Identify the long-run effect of a significant technological breakthrough on LRAS.
- Shifts LRAS to the right. Major innovations permanently increase productive potential.
- What impact does a reduction in regulation have on LRAS?
- Shifts LRAS to the right. Fewer restrictions allow more efficient resource allocation.
- What is the relationship between LRAS and price level?
- LRAS is not affected by the price level. Output remains constant at potential GDP regardless of prices.
- What is the effect of improved education on LRAS?
- Shifts LRAS to the right. Better skills increase worker productivity and potential output.
- Identify one factor that does not shift the LRAS curve.
- Price level. Price changes don't affect the economy's productive capacity.
- How does a decrease in government spending on infrastructure impact LRAS?
- Shifts LRAS to the left. Poor infrastructure reduces economy-wide productivity.
- What does a rightward shift in the LRAS curve indicate?
- Increase in potential output. Economy can produce more goods and services at full employment.
- Identify the impact of a long-term decline in birth rates on LRAS.
- Shifts LRAS to the left. Fewer future workers reduces long-term productive capacity.
- Identify the impact of a long-term decrease in savings on LRAS.
- Potentially shifts LRAS to the left. Less investment reduces future capital and productive capacity.
- What is the effect of a decrease in available land on LRAS?
- Shifts LRAS to the left. Less available space constrains productive activities.