Factors influencing SRAS

Question 1

What factors cause a shift in the SRAS curve?

Answer 1

Any factor that is not a change in price level.

Question 2

What specific factors could cause a shift in the SRAS curve.

Answer 2

1) Cost of raw materials (e.g. oil or steel).

2) Cost of energy (e.g. gas or electricity).

3) Wages.

4) Indirect taxes (e.g. VAT).

5) Subsidies.

6) Value of the £.

Question 3

What causes a right/ downward shift in SRAS curve?

Answer 3

1) An decrease in the cost of raw materials e.g. oil or steel.

2) An decrease in the cost of energy e.g. gas or electricity.

3) An decrease in wages.

4) An decrease in indirect taxes e.g. increase in VAT.

5) A increase in subsidies from the government.

6) A increase in the value of the £ which makes imports less expensive.

Question 4

What causes the SRAS curve to shift upward / left?

Answer 4

1) An increase in the cost of raw material e.g. higher oil prices.

2) An increase in the cost of energy e.g. gas or electricity.

3) Increase in wages.

4) An increase on indirect taxes e.g. VAT.

5) A decrease in subsidies from the government.

6) A decrease in the value of the £ which makes imports more expensive.

Question 5

Why does the SRAS curve slope upwards?

Answer 5

As price levels increase, businesses produce more output.