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we distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. in the long runtechnology is fixed but not in the short runthe price level is constant but in the short run it fluctuatesreal gdp equals potential gdpthe aggregate supply curve is horizontal while in the short run it is upward sloping.

Question

we distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. in the long runtechnology is fixed but not in the short runthe price level is constant but in the short run it fluctuatesreal gdp equals potential gdpthe aggregate supply curve is horizontal while in the short run it is upward sloping.

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Solution

It seems like there's a bit of confusion in your statement. Let's clarify the differences between the long-run aggregate supply curve (LRAS) and the short-run aggregate supply curve (SRAS).

  1. Technology: In both the short run and the long run, technology can change. However, in the short run, firms are typically limited to their current technology due to contracts and other constraints. In the long run, firms can adjust their technology to changes in the economy.

  2. Price Level: In the short run, the price level can fluctuate due to changes in demand and supply. In the long run, however, the price level is expected to be constant as the economy reaches its equilibrium.

  3. Real GDP vs Potential GDP: In the short run, real GDP (the value of all goods and services produced in an economy) can be different from potential GDP (the maximum possible output an economy can produce when all resources are fully employed). In the long run, real GDP equals potential GDP as the economy adjusts to any changes.

  4. Shape of the Curve: The SRAS curve is upward sloping, indicating that as the price level rises, firms are willing to produce more. On the other hand, the LRAS curve is vertical, indicating that in the long run, the economy's output is determined by factors like technology and resources, not the price level.

I hope this clarifies the differences between the SRAS and LRAS curves.

This problem has been solved

Similar Questions

which of the following is true about the long-run aggregate supply curve?it is vertical at the level of potential gdpit does not shift in response to temporary changes in aggregate demandit shows the relationship between the price level and real gdp when wages and other costs are at an equilibrium level.all the above

we distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. in the long run

What shape is the long-run aggregate supply curve? vertical at the value of potential real GDP downward-sloping vertical at the value of potential nominal GDP upward-sloping but not vertical vertical at the value of maximum real GDP

which of the following is true about the long-run aggregate supply curve?

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