Chapter 29, Problem 1SPPA

To determine

To explain:

The change in potential GDP and aggregate supply in the long run if more people in India have access to high education.

Explanation of Solution

Since the accessibility for education in India is wider, more people will have access to education.This will assist them to increase their knowledge and intellect, meaning there will be more knowledgeable labor force in the country. This will increase the country's human capital and having more educated people in the country will be an advantage for the country. This will gradually increase the potential GDP and the aggregate supply of India, especially in the long-term.

Economics Concept Introduction

Aggregate supply:

Aggregate supply is the total supply of the commodities and services which companies in the economy decide to sell at a specific period of time.

Business cycle:

A business cycle is also known as the trade cycle. It shows the upward or downward movement of the GDP around the long-run growth trend.

Aggregate demand:

Aggregate demand is simply the final demand for the final commodities and services produced in the economy within a period of time.