2.3.2 - short run AS

define SRAS

total output that all firms within an economy are willing and able to produce at different price levels in the short run

show a SRAS on a diagram

upward sloping, like a normal supply curve

just that its on the aggregate axes

why is the SRAS curve upwards sloping

higher price level = higher real GDP produced

(incentivised to supply more at higher price levels)

what causes a movement along the SRAS

change in average price level (ceteris paribus)

known as contractions and expansions/extensions

when is there a shift in SRAS

a change in anything that a affects COSTS OF PRODUCTION

eg…

…costs of FoPs

…exchange rates

…tax rates

higher costs of production = shift left