Lesson 4.2.2.6

4.2.2.6 Determinants of long-run aggregate supply Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.2.6, Determinants of long-run aggregate supply: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. What does the position of a vertical LRAS curve represent?

    • Current price level
    • Short-run unit costs
    • Total aggregate demand
    • Normal capacity output

  2. Which factor is a fundamental determinant of long-run aggregate supply?

    • Business taxation
    • Raw material prices
    • Technological progress
    • Money wage rates

  3. What term describes how easily factors of production can move between uses or locations?

    • Factor mobility
    • Labour flexibility
    • Factor productivity
    • Resource substitution

  4. On a Keynesian AS curve, what is the shape at full employment output?

    • Downward sloping
    • Vertical
    • Upward sloping
    • Horizontal

  5. What crucial role does the banking system play in raising long-run aggregate supply?

    • Setting wage rates
    • Controlling price inflation
    • Determining tax rates
    • Providing investment funds

  6. Which change is most likely to shift the LRAS curve to the right?

    • Lower aggregate demand
    • Higher money wages
    • Higher labour productivity
    • Lower commodity prices

  7. How can a cut in income tax rates shift long-run aggregate supply rightwards?

    • Increasing work incentives
    • Reducing production costs
    • Decreasing total savings
    • Lowering interest rates

  8. What is the main effect of major infrastructure investment on long-run aggregate supply?

    • Zero LRAS movement
    • Movement along LRAS
    • Rightward LRAS shift
    • Leftward LRAS shift

  9. What is the effect of net emigration reducing the working population on LRAS?

    • Movement upwards
    • Leftward shift
    • Movement downwards
    • Rightward shift

  10. Real GDP is £1,450 billion and potential output is £1,500 billion. What output gap exists?

    • Negative output gap
    • Zero output gap
    • Balanced output gap
    • Positive output gap

  11. What effect does an increase in enterprise and new business creation have on LRAS?

    • Rightward shift
    • Leftward shift
    • Downward movement
    • Upward movement

  12. In a deep recession on a Keynesian AS curve, higher aggregate demand causes:

    • Higher output only
    • Lower real output
    • Higher wage inflation
    • Higher prices only

  13. How does improved bank credit access for small businesses affect LRAS?

    • Leaves LRAS unchanged
    • Shifts LRAS right
    • Causes SRAS contraction
    • Shifts LRAS left

  14. Which factor shifts long-run aggregate supply without affecting short-run production costs directly?

    • Raw material prices
    • Business tax rates
    • Education and skills
    • Money wage rates

  15. What is the primary economic impact of increased spending on research and development?

    • Higher long-run capacity
    • Higher unit costs
    • Lower labour supply
    • Lower capital investment

  16. On a vertical LRAS curve, what is the long-run effect of an increase in aggregate demand?

    • Higher real output
    • Lower price level
    • Higher price level
    • Lower real output

  17. Which shape is the Keynesian aggregate supply curve when significant spare capacity exists in an economy?

    • Downward sloping
    • Upward sloping
    • Vertical
    • Horizontal

  18. Improving labour market flexibility is designed to shift the long-run aggregate supply curve in which direction?

    • Vertically upwards
    • To the left
    • Vertically downwards
    • To the right

  19. Which institutional factor directly provides funds for business investment to increase aggregate supply?

    • The banking system
    • The legal system
    • The welfare system
    • The tax authority

  20. At what level of capacity does the Keynesian aggregate supply curve become vertical?

    • Full employment
    • Normal capacity
    • High unemployment
    • Zero output

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