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For more information, please see full course syllabus of AP Macroeconomics
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Lecture Comments (3)

2 answers

Last reply by: Kim Gyu Min
Wed Apr 29, 2015 11:32 PM

Post by Kim Gyu Min on April 29, 2015

I have a question about LRAS. LRAS is fully flexible in all price and wages but why is that LRAS curve is in vertical line? In Micro I learned that vertical line is elastic and horizontal line is inelastic.

Aggregate Supply

  • The short-run aggregate supply shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy
  • As the aggregate price level increases, the aggregate output supplied increases
  • In the short-run, wages tend to be “sticky” or inflexible
  • In the long-run, wages are flexible
  • There are three ways to shift the SRAS curve
    • Changes in Commodity Prices
    • Changes in Nominal Wages
    • Changes in Productivity
  • The long-run aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible

Aggregate Supply

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

  • Intro 0:00
  • Lesson Overview 0:12
  • What is Short-Run Aggregate Supply? 1:11
    • Shows the Relationship
    • Profit Per Unit of Output
  • Aggregate Supply Curve 2:35
  • Nominal Wages and Sticky Wages 4:05
    • Largest Source of Inflexible Production Cost
    • Nominal Wages Paid to Workers
    • Sticky Wages
    • Slow to Fall in Unemployment
  • Shifts in the Aggregate Supply Curve 9:33
    • Changes in Commodity Prices
    • Changes in Nominal Wages
    • Changes in Productivity
  • Long-Run Aggregate Supply Curve 12:24
    • Shows the Relationship
    • Potential Output
    • What Would Shift the LRAS?
  • Example 1 15:10
  • Example 2 18:11
  • Example 3 20:37
  • Example 4 21:41