Question

What do you think can shift LRAS? Explain why.

(Please solve the problem in detail. Thanx for help)

Answer 1

Ans :- LARS mean long run aggregate supply alway in vertical (straight) line. It can be shift. LRAS curve determine all factors of production. In the economy when investment and production So LRAS curve shift left to right side. As the affect new technology reduce production cost and increase work efficient. That mean SRAS (short run aggregate supply) also shift to right side and both the effect on growth of economy.

LRAS curve can shift for many reason like increase in population growth, level of consumption increase, increase in domestic investments, increase in quality of education, increase in human capital, competition in market improve the work efficiency and production.