Economics A-Level
Spare capacity
What Spare capacity means in Economics A-Level, as defined for AQA.
Definitions of Spare capacity
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Reference: AQA
A situation where actual real GDP is below potential output, common during a recession, where cyclical unemployment is high and capital sits idle.
At low levels of output, this allows output to increase without inflationary pressure, making the curve perfectly elastic.
Topics that use Spare capacity
- Determinants of long-run aggregate supply (AQA A-Level)
- Economic growth and the economic cycle (AQA A-Level)
Related terms
- Productivity
- Aggregate demand
- Aggregate supply
- Asset price bubbles
- Banking system
- Capital accumulation
- Classical long-run aggregate supply (LRAS) curve
- Demand management
Using Spare capacity in the exam
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