Edexcel International A Level Economics
Edexcel International A Level Economics Aggregate Supply (AS) Exam Questions
Free Edexcel International A Level Economics exam questions for Aggregate Supply (AS), with a mark scheme for every pack. Covers short-run aggregate supply, long-run aggregate supply, Keynesian and classical views, and the factors Shifting each curve.
Aggregate Supply (AS) exam questions
1 question pack of real past exam questions, each with its mark scheme. Do not stop after a few: answer as many as you can without notes, then mark every answer with the mark scheme. The more questions you do, the more quickly you will spot how examiners ask about each idea.
About Edexcel International A Level Economics Aggregate Supply (AS)
Aggregate supply is a Unit 2 topic in Edexcel International A Level Economics. It explains how much output the economy's firms are willing and able to produce at each price level, both in the short run and the long run. You need to know the factors that shift short-run aggregate supply, mainly costs of production, and the factors that shift long-run aggregate supply, such as productivity and the quantity and quality of factors of production. You also compare the Keynesian and classical views of LRAS. Aggregate supply combines with aggregate demand to explain growth, inflation and unemployment, and it is central to evaluating supply-side policies.
What you need to know
- Short-run aggregate supply SRAS slopes upwards because firms will supply more as the price level rises when costs are fixed in the short run. It shifts with changes in wages, raw material and energy prices, indirect taxes and the exchange rate.
- Long-run aggregate supply LRAS shows the productive potential of the economy. It shifts with changes in technology, productivity, education and skills, demographic change and migration, institutional factors and investment in capital.
- Classical LRAS A vertical LRAS at full employment output, so in the long run changes in AD only change the price level.
- Keynesian LRAS A curve that is horizontal at low output (spare capacity), then upward sloping, then vertical at full capacity. Increases in AD raise output without inflation when there is spare capacity.
- Links to policy Supply-side policies aim to shift LRAS right, allowing non-inflationary growth and improved international competitiveness.
Common mistakes in Aggregate Supply (AS)
- Shifting LRAS for a change in raw material prices. Short-term cost changes shift SRAS; LRAS shifts with changes in productive capacity.
- Drawing a Keynesian LRAS without labelling the sections. Show the spare-capacity, bottleneck and full-capacity sections clearly.
- Assuming the classical and Keynesian views give the same policy conclusions. Keynesians see a role for raising AD in a recession; classical economists stress supply-side policy.
- Saying a rise in the price level shifts SRAS. It is a movement along SRAS.
- Forgetting that a depreciation can shift SRAS left. Imported raw materials become more expensive, raising firms' costs.
Try three Aggregate Supply (AS) exam-style questions
1. State two factors that would shift the short-run aggregate supply curve to the left. (2 marks)
Show the mark scheme answer
Any two from: rise in wages; rise in raw material or energy prices; increase in indirect taxes; depreciation raising import costs; fall in productivity in the short run.
2. With the help of a diagram, explain the effect of an increase in the education level of the workforce on the economy. (6 marks)
Show the mark scheme answer
Improved skills raise labour productivity; LRAS shifts right; the economy's productive potential increases; with AD unchanged the price level falls and real output rises; diagram with LRAS1 to LRAS2 and new equilibrium.
3. Explain the difference between the Keynesian and classical views of long-run aggregate supply. (4 marks)
Show the mark scheme answer
Classical LRAS is vertical at full employment, so the economy self-corrects and AD changes only affect prices in the long run; Keynesian LRAS has a horizontal section where there is spare capacity; the economy can be stuck below full employment; AD increases can raise output without inflation.
Aggregate Supply (AS) FAQs
What does Edexcel IAL Economics Aggregate supply cover?
It covers short-run and long-run aggregate supply, the factors that shift each curve and the Keynesian and classical views of LRAS.
Which unit is Aggregate supply examined in?
It is part of Unit 2, Macroeconomic performance and policy.
How do I decide whether to shift SRAS or LRAS?
Ask whether the change affects firms' costs in the short run (SRAS) or the economy's productive capacity through the quantity or quality of factors of production (LRAS).
