2.3.2 Short-run AS

Question 1

What 3 factors influence the short-run AS?

Answer 1

• changes in cost of raw materials and energy
• changes in exchange rates
• changes in tax rates

Question 2

How does a change in the cost of raw materials and energy affect the SRAS curve?

Answer 2

A rise in the cost of raw materials and energy would cause the SRAS to left

Question 3

How do exchange rates affect the SRAS curve?

Answer 3

An appreciation of the exchange rates causes imports to be cheaper, for firms that import their materials this is good, and the SRAS would shift to the right

Question 4

How does changes in tax rates affect the SRAS?

Answer 4

An in increase in corporation tax would shift the SRAS to the left as it costs more to produce the good at at given price