Pearson Edexcel IAL Economics 2.3.3 Aggregate supply (AS) Question Bank

Practise using AS, SRAS and LRAS diagrams to explain cost shocks, productivity changes, spare capacity and effects on prices and output.

Exam points

draw AD/AS diagrams showing SRAS or LRAS shifts and effects on price level and real output
distinguish movement along AS from shifts caused by raw materials, energy or tax changes
compare Keynesian and classical LRAS shapes using spare capacity and full employment output

Covered syllabus points

2.3.3.1a - concept of AS. characteristics 2.3.3.1b - AS curve. of AS 2.3.3.1c - distinction between a movement along and a shift of the AS curve 2.3.3.2a - Factors influencing SRAS. Changes in: (SRAS) • costs of raw materials and energy •2.3.3.3a - Different shapes of AS curve: (LRAS) • Keynesian • classical 2.3.3.3b - Factors influencing LRAS. Changes in: • the state of technology • productivity •

[Maximum number: 1]

Which one of the following will result in a movement along the AS curve?

An increase in the cost of raw materials

A decrease in the cost of energy

An increase in the price level

A decrease in the rate of indirect tax

[Maximum number: 4]

Between January 2014 and September 2020 the price of natural gas fell from $ 5.60 per cubic foot to $ 1.66 per cubic foot. Natural gas is an important source of energy for Japanese producers.

Draw a SRAS and AD diagram to show the effect of the decrease in the price of natural gas on the price level and real output for Japan.

[Maximum number: 1]

Which statement about the Keynesian LRAS curve is correct?

Perfectly inelastic at full employment

Relatively elastic at full employment

Relatively inelastic with spare capacity

Perfectly inelastic with spare capacity

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Covered syllabus points

2.3.3 - Aggregate supply (AS) question 1

2.3.3 - Aggregate supply (AS) question 2

2.3.3 - Aggregate supply (AS) question 3