11.4 real GDP to increase in the short run?
| real GDP to increase in the short run? | ||||||||||
| reason 1: a rise in AD. This can happen when exports rise, as one of the reasons. | ||||||||||
| Reason 2: A rise in AD. This can again be due to decline in imports. This is possible due to a change in consumer prefrences. | ||||||||||
| b. What are two factors that can cause the nation’s | ||||||||||
| real GDP to increase in the long run? | ||||||||||
| this requires a right shift of LRAS curve, which is possible with | ||||||||||
| a discovery of new mineral deposits- this will add to natutal resources of the nation which cancontribute to long run supply | ||||||||||
| a rise in productivity levels due to prior investments in education and vocational training. | ||||||||||
| the productivity isa measure of anation’s resources. Any increase translates into higher long run AS. | ||||||||||
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