Skip to content
MathsGenie logo
Quick links
Open app

Course home

  1. A Level
  2. Economics Edexcel A
  3. Question bank

2.3.3 Long-run AS

EasyMediumHard
12345678
Question 5

The Fehmarnbelt Tunnel is a major under-construction immersed tunnel connecting Denmark and Germany. It is expected to reduce rail travel times between Copenhagen and Hamburg from 4.5 hours to under 3 hours, and replace a 45-minute ferry trip with a 7-minute train journey. The project is estimated to cost approximately €7.4 billion, largely funded by government-backed infrastructure spending.

Draw an aggregate demand and aggregate supply (AD/AS) diagram to show the likely long-run impact of this new transport link on the price level and real output in the region.

An AD/AS diagram with Price Level on the y-axis and Real Output on the x-axis. It depicts an initial equilibrium at the intersection of AD1 and LRAS1 (at Y1, PL1). AD1 shifts right to AD2 due to increased investment spending, and LRAS1 shifts right to LRAS2 due to increased productive capacity and reduced transport costs, resulting in a new equilibrium at Y2 with an ambiguous change in the price level.

[4]

2.3.3 Long-run AS Questions

  1. A Level
  2. /Economics
  3. /2.3.3 Long-run AS