I am confused about the Keynesian LRAS, I understand that the LRAS represents the full capacity of the economy. Therefore, there should be no spare capacity in the long run. What I don’t understand is how on a Keynesian LRAS it appears there is spare capacity at low levels of output in the long run, as shouldn’t the Economy be operating at its productive potential?

    How does the Keynesian LRAS work?
    byu/Leading-Department11 inAskEconomics



    Posted by Leading-Department11

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