Short Run AS 2.3.2 Flashcards
1
Q
Main cause of the shift in SRAS is
A
main cause is the change in cost of production which is cause by three factors
2
Q
how does the change in cost of raw materials effect the SRAS
A
If the cost of oil rises, the cost of production of almost everything rises, causing the SRAS to go down
3
Q
how does the change in the exchange rate effect the SRAS
A
if the pounds gets stronger, then imports will become cheaper and cause SRAS to increase. shift downwards.
4
Q
how does the change in the tax rates effect the SRAS
A
taxes increase the cost of production and this will cause a fall in SRAS. A shift to the left
