Productive capacity
What Productive capacity means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Productive capacity
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Reference: Pearson Edexcel
Changes in this, driven by the quantity or quality of factors of production, shift long-run aggregate supply.
The economy's maximum capacity, which increases when the LRAS curve shifts to the right.
The aggregate supply of the economy, which supply-side policies specifically target.
Topics that use Productive capacity
- Supply-side policies (Pearson Edexcel A-Level)
- The AD/AS model (Pearson Edexcel A-Level)
Related terms
- Macroeconomic equilibrium
- Aggregate Demand (AD)
- Cost-push inflation
- Costs of production
- Demand-pull inflation
- Economic incentives
- Factors of production
- Full capacity output
Using Productive capacity in the exam
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