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POSITIVE RELATION: A relation, either a principle or hypothesis, in which an increase one variable is associated with an increase in the other variable. A positive, or direct, relation is most commonly illustrated by an upward sloping line. It can also be represented by an equation in which the slope value is positive.
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Lesson 14: Aggregate Supply | Unit 3: The Curves
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Page: 8 of 20
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The long-run aggregate supply (LRAS) curve captures the relationship between the price level and the aggregate supply of real production in the long run.- GDP deflator, the price level, is measured on the vertical axis. Real GDP, the real production, is measured on the horizontal axis.
Highlights:- The LRAS is a straight, vertical line.
- The price level does not affect the aggregate supply of real production.
- The supply is real production given that all resources are fully employed.
- Flexible prices ensures that full employment production is maintained, in the long run.
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AGGREGATE SUPPLY SHIFTS Changes in the aggregate supply determinants shift both the short-run aggregate supply curve and the long-run aggregate supply curve. The mechanism is comparable to that for market supply determinants and market supply. There are two options--an increase in aggregate supply and a decrease in aggregate supply. An increase in resource quantity or quality or a decrease in resource price shifts one or both of the aggregate supply curves to right. A decrease in resource quantity or quality or an increase in resource price shifts one or both of the aggregate supply curves to left.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either an AC adapter that won't fry your computer or a case for your designer sunglasses. Be on the lookout for slow moving vehicles with darkened windows.
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The standard "debt" notation I.O.U. does not mean "I owe you," but actually stands for "I owe unto..."
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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AVC
Average Variable Cost
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