3 Tutorials that teach Long Run vs Short Run
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Long Run vs Short Run

Long Run vs Short Run

Author: Colton Cranston

In this lesson, students will learn about long and short term changes in GDP.

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Introduction to Psychology

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Notes on "Long Run vs Short Run"

Key Terms

Price Level

An aggregate index value that provides an indication of the increase

in prices from one period to another; used to evaluate inflation across periods.


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.

RGDP Growth

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



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.