Distinction Between A Movement Along And A Shift In Ad And As
Economics notes
Distinction Between A Movement Along And A Shift In Ad And As
SRAS:
➡️ Changes in the cost of production, such as an increase in wages or a decrease in the price of raw materials, can cause a shift in the SRAS curve.
➡️ Changes in the level of aggregate demand, such as an increase in government spending or a decrease in taxes, can also cause a shift in the SRAS curve.
LRAS:
➡️ Changes in the level of technology, such as the introduction of new production methods or the development of new products, can cause a shift in the LRAS curve.
➡️ Changes in the size of the labor force, such as an increase in the number of workers or an increase in the number of hours worked, can also cause a shift in the LRAS curve.
What is the difference between a movement along and a shift in AD and AS?
A movement along the AD or AS curve occurs when the price level changes, causing a change in the quantity of goods and services demanded or supplied. A shift in the AD or AS curve occurs when a non-price factor, such as changes in consumer confidence or technology, causes a change in the quantity of goods and services demanded or supplied at every price level.
How does a shift in AD or AS affect the economy?
A shift in AD or AS can have significant effects on the economy. A shift in AD can lead to changes in output, employment, and inflation. A shift in AS can lead to changes in the price level and output. For example, a positive shift in AS can lead to lower prices and higher output, while a negative shift in AS can lead to higher prices and lower output.
What are some factors that can cause a shift in AD or AS?
There are many factors that can cause a shift in AD or AS. Some examples include changes in consumer confidence, changes in government spending or taxation, changes in interest rates, changes in the exchange rate, and changes in technology. These factors can affect the demand for goods and services, the supply of goods and services, or both, leading to a shift in the AD or AS curve.