SEARCH
You are in browse mode. You must login to use MEMORY

   Log in to start


From course:

Economics A Level

» Start this Course
(Practice similar questions for free)
Question:

Why may Keynesian Economists say the LRAS is Curved?

Author: go kys



Answer:

-Low Levels of Output has AD as Elastic - Spare Capacity in the Economy. This means Output can Rise without Prices Rising. If lots of Unemployed, then Firms can get more Workers without a Significant Price Rise. -When the Curve slopes Upwards, the Economy is having Supply Problems [Bottlenecks] which increase Costs. -Curve becomes Vertical when the Economy is at Fall Capacity. AS is at point where All Resources are being Used and Output can't Increase no more


0 / 5  (0 ratings)


-Low Levels of Output has AD as Elastic - Spare Capacity in the Economy. This means Output can Rise without Prices Rising. If lots of Unemployed, then Firms can get more Workers without a Significant Price Rise. 
-When the Curve slopes Upwards, the Economy is having Supply Problems [Bottlenecks] which increase Costs. 
-Curve becomes Vertical when the Economy is at Fall Capacity. AS is at point where All Resources are being Used and Output can't Increase no more
1 answer(s) in total

Author

go kys
go kys