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Costello
Member Since 12 Aug 2010Offline Last Active Today, 10:49
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In Topic: Cram time! How are you preparing?
May 14, 2012 - 11:34
WVW, on May 13, 2012 - 01:52, said:
On that note, there is one thing in macroeconomics i don't understand. Which aggergate supply curve does IB want us to use? Keynesian, Neo Classical or Moderate Consensus (Keynesian shape for SRAS and Neo Classical LRAS). if its moderate consensous, how is movement in the curve shown? Specifically, does the SRAS move both right and down or just right? and does the LRAS move right as well?
Hi, for SRAS there's just one aggregate supply curve, which is pretty much the same shape as a regular supply curve. In the long run, you're probably gonna have to describe both ways aggregate supply can work (and I'm guessing that the question will most likely specify what it wants). SRAS can shift to left or right depending on the changes of the costs in the economy that the suppliers will face and LRAS can also shift to both left or right depending on the potential output of the economy, so as Production Possibility Curve (PPC) increases it's potential, the LRAS will increase.
