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What is the main difference between the SRAS and the LRAS curve?
The SRAS assumes that the level of capital is fixed. In the short run the increase of the price of goods enables firms to have more workers, pay high wages and produce more goods. The LRAS is determined by productivity such as size of work force, size of capital stock, levels of education and labor productivity. The SRAS is used for showing changes in wage costs or oil prices. The LRAS is used for economic growth, increase in capital stock and investment.
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