Notes for "Long Run vs. Short Run"
An aggregate index value that provides an indication of the increase in prices from one period to another; used to evaluate inflation across periods.
RGDP: Real Gross Domestic Product
Gross Domestic Product (the sum of the final value of goods and services produced over a specific time interval and within a country’s national borders) calculated across time periods using a constant price level.
The measure of the percentage change in RGDP from one period to another where price level is held constant and the growth provides insight to the increase in the production of final goods and services over the interval evaluated.
Consumption and production that does not stress or exceed the threshold required for natural regeneration of depleted resources.
Long-run aggregate supply is assumed to be constant in the long-run as in the long-run resources are assumed to be used optimally, leaving no potential for increasing capacity. LRAS is a vertical curve.
Short-run aggregate supply is assumed to maintain the positive price and quantity correlation; more can be produced through increased resource utilization, technological improvements or other factors. SRAS is an upward sloping curve.