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AP Macroeconomics 3.4: Long-Run Aggregate Supply

Define LRAS as the economy’s full-employment capacity, connect it to the PPC, and identify long-run output and growth patterns.

Syllabus
Effective Fall 2025
Course
AP Macroeconomics

Covered syllabus points

MOD-2.E—Define (using graphs as appropriate) the short run and the long runMOD-2.F—Define (using graphs as appropriate) the long-run aggregate supply (LRAS) curve

3.4 Long-Run Aggregate Supply (LRAS) question 1

[Maximum number: 1]

Classical economists believe that the economy moves toward full employment because

A

government spending supplements private investment to keep aggregate demand in balance with aggregate supply

B

households spend all of their disposable income to purchase the full-employment output

C

wages and prices are flexible

D

private investment is constant and independent of national income

E

the money supply grows at a constant rate to generate sufficient demand to purchase the full-employment output

3.4 Long-Run Aggregate Supply (LRAS) question 2

[Maximum number: 1]

Assume that Nepal is in long-run macroeconomic equilibrium and has an open economy.

Draw a correctly labeled graph of the aggregate demand, short-run aggregate supply, and

long-run aggregate supply curves for Nepal, and show each of the following.

The full-employment output, labeled YF\mathrm{Y}_{\mathrm{F}}

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