Does economic growth result from increases in aggregate demand, ...

[mpobi80]

Does economic growth result from increases in aggregate demand, short-run aggregate supply, or long-run aggregate supply?
 
  What will be an ideal response?

Question 2

Refer to Table 2-12. Does either Guatemala or Honduras have an absolute advantage and if so, in what product?
 
  A) Honduras only has an absolute advantage in producing sailboats.
  B) Guatemala has an absolute advantage in producing both products.
  C) Guatemala only has an absolute advantage in producing canoes.
  D) Honduras only has an absolute advantage in producing canoes.

[Danny Ewald]

Answer to Question 1

Economic growth results from increases in long-run aggregate supply. Economic growth occurs because the quantity of labor increases, capital is accumulated and there are technological advances over time. All three of these factors increase potential GDP and shift the LAS curve rightward.

Answer to Question 2

B

[mpobi80]

Gracias!

[amandalm]

YES! Correct, THANKS for helping me on my review