Aggregate supply

Which one of the following diagrams, A, B, C or D, shows the impact on an economy of a

Extract B (lines 4–5) states: ‘Historically, productivity has increased over time, which has contributed to real wage rises and improved living standards.’

Using the data in the extracts and your knowledge of economics, assess the view that the government should make raising productivity a priority in order to improve living standards in the UK.

Figure 7 shows two long-run aggregate supply curves (LRAS) for an economy.

Which one of the following is most likely to explain the shift of the long-run aggregate supply curve from LRAS₁ to LRAS₂?

Explain the possible causes of a shift in the short-run aggregate supply curve to the left.

Extract B (lines 18–19) states: ‘FDI can have many benefits. It should create employment, boost long-run economic growth and increase exports.’

With the help of a suitable diagram, explain how a rise in inward foreign direct investment (FDI) may lead to increased exports.

Extract E (lines 7–9) states: ‘It was hoped that policy measures, including a reduction in tariffs... would help to reduce inflation’.

With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation.

Which one of the following diagrams, A, B, C or D, shows the most likely short-run impact on an economy of an improvement in technology in the production process?

Extract E (line 14) states: ‘Investment in R&D has been an important driver of economic growth and industrial progress.’

With the help of a diagram, explain how investment in research and development (R&D) can help to increase the long-run growth rate of an economy.

Figure 4 shows two aggregate demand (AD₁ and AD₂) curves and two long-run aggregate supply (LRAS₁ and LRAS₂) curves for an economy.

All other things being equal, which one of the following is the most likely explanation for the movement of the economy from E₁ to E₂?

Extract C (line 19) states: ‘Improving workers’ productivity is the key to increasing real GDP’.

With the help of a diagram, explain how improving productivity should lead to rising real GDP.

Figure 7 shows two aggregate demand (AD₁ and AD₂) curves and two long-run aggregate supply (LRAS₁ and LRAS₂) curves for an economy.

All other things being equal, which one of the following combinations, A, B, C or D, is most likely to explain the movement of the economy from E₁ to E₂?

An increase in the

The diagram below shows the aggregate demand (AD) curve, the long-run aggregate supply (LRAS) curve, and two short-run aggregate supply (SRAS₁ and SRAS₂) curves for an economy. The economy’s initial equilibrium is at E_1.

The most likely explanation for the move of the economy from its initial equilibrium at E₁ to a new short-run equilibrium at E₂ is a decrease in the

All other things being equal, an increase in the ratio of capital to labour resulting from an increase in investment is most likely to lead to a

Extract E (lines 9–10) states ‘Improvements in productivity on the supply side of the economy could actually lead to more deflation.’

With the help of a diagram, explain how improvements in productivity could cause deflation.

The diagram below depicts an aggregate demand (AD) curve and two long-run

All other things being equal, the movement of the economy from its initial equilibrium at E₁ to E₂ is most likely to be caused by an increase in

The diagram below shows the aggregate demand (AD) and two short-run

All other things being equal, which one of the following is most likely to cause the short-run aggregate supply curve to shift from SRAS₁ to SRAS₂?