Short-run aggregate supply

Question 1

What does short-run mean?

Answer 1

It is assumed that at least one factor of production are fixed

Question 2

What is aggregate supply?

Answer 2

the quantity of goods and services that producers in an economy are willing and able to supply at a given level of prices

Question 3

What is short-run aggregate supply?

Answer 3

relationship between planned national output and the general price level

Question 4

What causes a movement along the SRAS curve?

Answer 4

• a rise in general price level should stimulate an expansion of supply
• a fall in prices, production may contract

Question 5

What causes a shift to the SRAS curve?

Answer 5

• changes in resource (producing goods and services) prices
• business taxes, subsidies, regulations
• exchange rate
• supply shocks

Question 6

External factors affecting SRAS:

Answer 6

• World oil and gas prices
• Energy prices/costs
• Other mineral/metal prices
• Foodstuff prices

Question 7

Impact of an increase in SRAS

Answer 7

An increase in AS causes an expansion of AD and a higher equilibrium level of national output. an outward shift of aggregate supply

Question 8

Impact of a fall in SRAS:

Answer 8

An inward shift of aggregate supply

A decrease in AS causes a contraction of AD and a lower equilibrium level of national output