Question:
Why may Keynesian Economists say the LRAS is Curved?
Author: eric_galvaoAnswer:
-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
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![-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](https://markdown.memory.com/eq_uploads/1110385/question_image_f1623ea9-e7b3-4dac-b525-46386a23d38c.jpg)
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eric_galvao