SRAS

The short-run aggregate supply curve may shift to the right if:

• productivity increases

• personal income taxes decrease.

• nominal wages increase.

• commodity prices rise.

If nominal wages fall, then short-run aggregate:

• supply shifts to the right.

• demand shifts to the right.

• supply shifts to the left.

• demand shifts to the left.

Using the accompanying figure we can safely conclude that

•   an increase in the price level is responsible for pushing the SRAS curve to the right.

• a decrease in the price level is responsible for pushing the SRAS curve to the right.

• that there has been a decrease in the short-run aggregate supply.

• that there has been an increase in the short-run aggregate supply.

Which of the following would likely cause the short-run aggregate supply curve to shift to the left?

• a decrease in consumer spending

• an increase in the price of imported oil

•   a decrease in the price of imported oil

• an increase in consumer spending

The short-run aggregate supply curve is positively sloped because:

• higher prices lead to higher profit and higher output.

•   workers are willing to work for lower wages rather than be laid off.

• wages and other costs of production respond immediately to changes in prices.

• profit is lower when prices increase, so output decreases.

The long-run aggregate supply curve is vertical because in the long run:

• the price of labor is flexible, while the price of physical capital is fixed.

•   technological progress outpaces raises in nominal wages.

• all prices are flexible.

•   all factors of production increase.

What causes the SRAS to shift?

• Changes in per unit cost of production

• Changes in government spending

• Changes in price of raw materials

• Changes in government tax and subsidies

Change in SRAS: OPEC Successfully Increases Oil Prices

• Increase

• Decrease

• No changes

Change in SRAS: Unions grow more aggressive; wage rates increase

• Increase

• Decrease

• No changes

Change in SRAS: Wars between Russia and Ukraine lead to rising energy cost

• Increase

• Decrease

• No changes