Question

Describe what happens in the economy when there is an increase in the level of the...

Describe what happens in the economy when there is an increase in the level of the factors of production (the endowment) in the short run and long run.

Homework Answers

Answer #1

Factors of production include land, labor, capital and entrepreneurship. All factors if increased lead to a better economic growth and sustainability. Innovation and discovery play an important role in the advent of the increase in the factors of production. New inventions in technology which reduces human efforts and thereby increase the productivity and total output are always good for economic growth. With more goods produced with the increased efficiency, the prices of the goods available are cheaper than before. This makes available goods to everybody in the economy and raises the standard of living of the people of the economy. In the short run, the economy moves towards greater output at cheaper prices and in the long run the economy has a new equilibrium of demand and supply with new output and new price levels.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
20. Describe and show what happens to aggregate equilibrium when SAS changes (both increase and decrease;...
20. Describe and show what happens to aggregate equilibrium when SAS changes (both increase and decrease; be sure to give at least one reason for the shift). 21. Describe and show long run aggregate equilibrium. Identify a recessionary gap and an inflationary gap and reasons why the economy is in them. Describe and show how each gap is eliminated on both the AD side and the SAS side. .
If there is an increase in productivity, show what happens to output level, price level and...
If there is an increase in productivity, show what happens to output level, price level and the unemployment rate in the long run? (Use AD-AS model)
If there is an increase in productivity, show what happens to output level, price level and...
If there is an increase in productivity, show what happens to output level, price level and the unemployment rate in the long run? (Use AD-AS model)
What factors can shift SAS curve? What happens to Long Run AS in a healthy economy?
What factors can shift SAS curve? What happens to Long Run AS in a healthy economy?
when money supply increase permanently in a large open economy, what happens to the long term...
when money supply increase permanently in a large open economy, what happens to the long term nominal interest rate? a, long term nominal interest rate increase b, long term nominal interest rate decrease c, long term nominal interest rate unchanged d, long term nominal interest rate may increase or decrease
As the level of real GDP increases, the short-run aggregate supply curve: a. shifts to the...
As the level of real GDP increases, the short-run aggregate supply curve: a. shifts to the right. b. shifts to the left. c. becomes flatter. d. becomes steeper. e. becomes horizontal to the real GDP axis. Firms' profits or production do not increase in the long run because: a. some factors of production are fixed in the long run. b. all the factors of production are variable in the long run. c. changes in factor costs completely offset any change...
Using the aggregate supply and demand model, illustrate what happens in the long run when the...
Using the aggregate supply and demand model, illustrate what happens in the long run when the economy suffers a supply shock. Begin your analysis by assuming the economy has suffered the supply shock in the short run, but has not yet adjusted to it in the long run. (10 points)
When the economy is producing at an output level below the potential output, the unemployment rate...
When the economy is producing at an output level below the potential output, the unemployment rate is above the natural rate of unemployment. the short-run aggregate supply curve will slowly shift to the left when wages start to adjust. the intersection of the short-run aggregate supply curve and the aggregate demand curve is to the right of the long-run aggregate supply curve. the economy might be at the long-run equilibrium. Which of the following is not a determinant of the...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no frictional unemployment the level of output that will prevail in the long run as determined by the production function and factors of production the level of output that will prevail in the long run as determined by the quantity equation the level of output in the long run when the money supply is constant The Short-Run Aggregate Supply (SRAS) curve reflects the natural level...
1o. What happens in the long run, if the economy self adjusts, to: Output?____ Unemployment? _________...
1o. What happens in the long run, if the economy self adjusts, to: Output?____ Unemployment? _________ Price level? ___________ 1r. What policies could the government use to stabilize the economy? 1k. How would these policies work? 1s. What happens in the long run, if the government uses policy, to: Output?_________ Unemployment? _____________ Price level? _____________ 1t
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT