The long run aggregate supply (LRAS) curve represents the total quantity of goods and services that firms are willing and able to supply at a given level of technology and resources.

If the LRAS curve decreases, it means that the economy's potential output is reduced. This could be due to a decrease in resources, such as labor or capital, or a decrease in technology.

1. Impact on Real GDP: A decrease in LRAS will lead to a decrease in real GDP. This is because there are fewer goods and services being produced and supplied in the economy.

2. Impact on Price Level: A decrease in LRAS will lead to an increase in the price level. This is because the decrease in supply of goods and services, with demand remaining constant, will lead to an increase in prices.

So, if the long run aggregate supply curve decreases, real GDP will decrease and the price level will increase.

Question

The long run aggregate supply (LRAS) curve represents the total quantity of goods and services that firms are willing and able to supply at a given level of technology and resources.

If the LRAS curve decreases, it means that the economy's potential output is reduced. This could be due to a decrease in resources, such as labor or capital, or a decrease in technology.

1. Impact on Real GDP: A decrease in LRAS will lead to a decrease in real GDP. This is because there are fewer goods and services being produced and supplied in the economy.

2. Impact on Price Level: A decrease in LRAS will lead to an increase in the price level. This is because the decrease in supply of goods and services, with demand remaining constant, will lead to an increase in prices.

So, if the long run aggregate supply curve decreases, real GDP will decrease and the price level will increase.

Knowee AI · Accepted Answer

The long run aggregate supply (LRAS) curve represents the total quantity of goods and services that firms are willing and able to supply at a given level of technology and resources.

If the LRAS curve decreases, it means that the economy's potential output is reduced. This could be due to a decrease in resources, such as labor or capital, or a decrease in technology.

1. Impact on Real GDP: A decrease in LRAS will lead to a decrease in real GDP. This is because there are fewer goods and services being produced and supplied in the economy.

2. Impact on Price Level: A decrease in LRAS will lead to an increase in the price level. This is because the decrease in supply of goods and services, with demand remaining constant, will lead to an increase in prices.

So, if the long run aggregate supply curve decreases, real GDP will decrease and the price level will increase.

If long run aggregate supply curve decreases, real gross domestic product (GDP) and the price level will change in which of the following ways?Elimination Tool

Question

If long run aggregate supply curve decreases, real gross domestic product (GDP) and the price level will change in which of the following ways?

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