Topic Videos
Key Diagrams - Infrastructure and AD-AS Analysis
- Level:
- A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 4 Jun 2022
In this short video we look at how infrastructure projects might be discussed using an AD-AS diagram.
The Economist calls infrastructure the “economic arteries and veins; roads, ports, railways, airports, power lines, pipes and wires that enable people, goods, commodities, water, energy and information to move about efficiently.”
Successful infrastructure projects can have a triple-powered effect on an economy:
- The projects themselves create demand leading to an outward shift of aggregate demand
- Improved transport, telecoms and other services can lower supply costs for firms – shifting out SRAS
- Infrastructure adds to the productive capacityof an economy - shifting out LRAS
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