Ask Question
21 July, 18:12

Suppose the economy is initially at potential output and the quantity of aggregate output supplied increases. What information would you need to determine whether this was due to a movement along the SRAS curve or a shift of the LRAS curve?

+4
Answers (1)
  1. 21 July, 21:20
    0
    We need to know if the price level is changing or not.

    Explanation:

    If the economy is at the potential output and the quantity of aggregate output supplied increases, we need to know if this increase is because of an increase in the price level.

    If the aggregate price level is increasing then there will be a movement on the SRAS curve. If the increase in quantity supplied is because of a rightward shift in the LRAS curve, the price level will remain the same.

    Also, if the quantity supplied goes back to its original level, in the long run, it implies that the increase in output was because of a short run movement.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Suppose the economy is initially at potential output and the quantity of aggregate output supplied increases. What information would you ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers