Kalling all Keynesians - examine how changes in aggregate supply affect the general level of prices in an economy (1 Viewer)

[LoanWoolfq]

5 marks...
I have started off by saying!

Aggregate supply refers to the productive capacity of an economy. as aggregate supply increases a higher number of goods are produced, meaning that economies of scale are utiliised resulting in higher prices. Further, if aggregate supply is decreased due to higher input prices or lost efficiency/productivity, inflation occurs. thus meaning that increased aggregate supply results in lower prices while the opposite is true.

any other suggestions?

 

[#RoadTo31Atar]

I think this question wants you to talk about the inflationary/deflationary gap e.g AS>AD or AS<AD, you can talk about what happens if AS goes up and what happens if it decreases. I don't think definitions get you marks for these questions.

 

[studiesofboard]

Yeah I somewhat agree with @#RoadTo31Atar stick to the main idea of the question. 'Examine' questions require you to 'inquire into' which means going deep into the question. However, since the question is 5 marks you need to write 5 distinct points. If you write 6 points you can write a definition but make 5 other points focusing on the rest of the question. It's good to write a definition just because you can always secure 1 mark in case you get something wrong when answering the rest of the question.

 

[LoanWoolfq]

thanks