Long run aggregate supply
• Long run aggregate supply(LRAS): the ability of how an economy’s
supply could meet demand in the long run; this is done by looking at
an economy’s factors of production and technology.
• The Classical view is that Long Run Aggregate Supply (LRAS). This has
important implications. The classical view suggests that real GDP is
determined by supply-side factors – the level of investment, the level
of capital and the productivity of labour
• The Keynesian view of long-run aggregate supply is different. They
argue that the economy can be below full capacity in the long term.