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National Income and Macroeconomic Aims
Quick questions on Aggregate supply explained: H2 Economics
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is short-run aggregate supply (SRAS)?Show answer
Short-run aggregate supply shows total output firms are willing to produce at each price level when input prices (especially wages) are sticky. It slopes upward: when the price level rises but wages have not yet adjusted, firms' profit margins widen, so they expand output. Conversely, a lower price level squeezes margins and output falls.
What is long-run aggregate supply (LRAS)?Show answer
Long-run aggregate supply shows output when all prices, including wages, have fully adjusted. There are two common depictions:
What is q1?Show answer
Explain why the short-run aggregate supply curve slopes upward. [3 marks]
What is q2?Show answer
State what determines the position of the long-run aggregate supply curve. [2 marks]
What is q3?Show answer
Explain the effect of a rise in oil prices on the SRAS curve. [2 marks]
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