4.2.2.5 Determinants of short-run aggregate supply NOTES

What does the SRAS curve represent?

• Consumer demand patterns over time

• The long-term economic growth rate

• The relationship between price level and quantity of goods supplied in the short term

• The balance of trade between countries

What causes the SRAS curve to shift to the left?

• Decrease in interest rates

• Increase in production costs

• Decrease in production costs

• Increase in consumer demand

How does an increase in nominal wage rates affect the SRAS curve?

• Shifts the curve to the left

• No impact on the curve

• Makes the curve steeper

• Shifts the curve to the right

What impact does a decrease in raw material prices have on the SRAS curve?

• Shifts it to the right

• Makes it flatter

• No impact

• Shifts it to the left

What is the effect of increased business taxation on the SRAS curve?

• Shifts to the right

• Shifts to the left

• No change

• Makes it more elastic

How does an increase in productivity affect the SRAS curve?

• Does not affect the SRAS curve

• Increases the quantity supplied at each price level

• Shifts the curve downwards

• Decreases the quantity supplied at each price level

What does an upward slope of the SRAS curve indicate?

• Decrease in output with higher prices

• Increase in output with higher prices

• Constant output regardless of price changes

• Decrease in output with lower prices

What role do nominal wages play in determining the SRAS?

• They represent the cost of labor affecting production costs

• They determine the price level directly

• They control the export-import balance

• They indicate the overall economic health

What happens to the SRAS curve when there is a decrease in nominal wages?

• It shifts to the right

• It shifts to the left

• It does not change

• It becomes steeper

Which factor can lead to a leftward shift in the SRAS curve?

• Decrease in business taxes

• Increase in productivity

• Decrease in raw material prices

• Increase in nominal wage rates