7.2 AD and AS analysis Flashcards Preview

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Flashcards in 7.2 AD and AS analysis Deck (7)
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1
Q

What is short run AS

A

Any change in the costs of production

2
Q

What is long run AS?

A

Any change in the quantity, quality or productivity of factors of production

3
Q

What did Keynes believe that led to his model of the long-run AS?

A

Keynes believed the economy could settle in equilibrium below the full employment level of output.

4
Q

Would Keynesian economists advocate and support economic policies that improve and manage AS or AD?

A

If the economy was in recession Keynesian economists would focus attention on policies that stimulate the components of aggregate demand (C, I, G, X, M)

5
Q

Does a demand side shock move AD or AS?

A

Moves AD

6
Q

Does a supply side shock move AD or AS?

A

Moves AS

7
Q

Are shocks felt to a larger extent in open or closed economies?

A

Open like the UK