Short-Run Aggregate Supply (SRAS) - AP Macroeconomics
- State the impact of a labor strike on SRAS.
- Shifts SRAS curve to the left. Strikes reduce available labor and output.
- How does the SRAS curve react to a decrease in input prices?
- Shifts SRAS curve to the right. Lower costs increase firms' willingness to supply.
- What is the shape of the SRAS curve?
- Upward sloping. Higher prices make production more profitable in the short run.
- How does a decrease in oil prices affect the SRAS curve?
- Shifts SRAS curve to the right. Lower input costs reduce production expenses, increasing supply.
- How does SRAS respond to technological regress?
- Shifts SRAS curve to the left. Worse technology increases production costs.
- Does a change in consumer demand shift the SRAS curve?
- No, it affects aggregate demand, not SRAS. Consumer demand affects AD curve, not SRAS.
- What is the relationship between SRAS and inflation expectations?
- Higher inflation expectations can shift SRAS left. Expected inflation leads to higher wage demands.
- Define 'sticky wages' in the context of SRAS.
- Wages that do not adjust quickly to changes in economic conditions. Creates short-run rigidity in labor markets.
- What effect does a supply shock have on SRAS?
- Can shift SRAS curve left or right depending on the shock. Direction depends on whether shock is positive or negative.
- What does the SRAS curve illustrate?
- The SRAS curve illustrates the relationship between price level and output in the short run. Shows how much firms will produce at different price levels.
- Identify the impact of a decrease in business taxes on SRAS.
- Shifts SRAS curve to the right. Lower taxes reduce business costs.
- How does SRAS react to a decrease in corporate tax rates?
- Shifts SRAS curve to the right. Lower taxes reduce business operating costs.
- Does a change in consumer preferences shift the SRAS curve?
- No, it affects aggregate demand, not SRAS. Preferences affect demand, not supply conditions.
- What is the impact of an increase in capital stock on SRAS?
- Shifts SRAS curve to the right. More capital increases productive capacity.
- What happens to SRAS if production technology improves?
- Shifts SRAS curve to the right. Better technology reduces production costs.
- What is the effect of government regulation on SRAS?
- Increased regulation shifts SRAS left. Compliance costs increase, reducing supply.
- Does a change in aggregate demand shift the SRAS curve?
- No, it affects the quantity supplied, not SRAS itself. AD affects quantity demanded, not supply conditions.
- What could cause the SRAS curve to shift to the left?
- An increase in production costs. Higher costs reduce profitability and supply.
- How does an increase in government subsidies affect SRAS?
- Shifts SRAS curve to the right. Subsidies reduce production costs, increasing supply.
- What causes movement along the SRAS curve?
- Changes in the price level. Price level changes create movement along, not shifts of, the curve.
- How does an unexpected increase in oil prices affect SRAS?
- Shifts SRAS curve to the left. Oil is a key input cost for many industries.
- What is the effect of a decrease in government subsidies on SRAS?
- Shifts SRAS curve to the left. Fewer subsidies increase effective production costs.
- How does an increase in input prices affect SRAS?
- Shifts SRAS curve to the left. Higher input costs increase production expenses.
- Identify a factor that shifts the SRAS curve.
- Changes in input prices. Higher input costs reduce profitability, shifting supply leftward.
- How does improved worker productivity impact the SRAS curve?
- Shifts SRAS curve to the right. Higher productivity reduces per-unit production costs.
- State the effect of an increase in productivity on the SRAS curve.
- Shifts SRAS curve to the right. Higher productivity lowers per-unit costs, increasing supply.
- What is an example of a factor that does NOT shift SRAS?
- A change in the price level. Price level changes cause movement along, not shifts.
- How does a change in productivity affect SRAS?
- Increased productivity shifts SRAS right. Higher output per worker reduces unit costs.
- Describe the effect of increased regulation on SRAS.
- Shifts SRAS curve to the left. More regulation increases compliance costs for firms.
- What happens to SRAS if business taxes increase?
- Shifts SRAS curve to the left. Higher taxes increase costs, reducing firms' willingness to supply.
- Identify the impact of increased labor costs on SRAS.
- Shifts SRAS curve to the left. Higher labor costs increase production expenses.
- What happens to SRAS when there is an adverse supply shock?
- Shifts SRAS curve to the left. Negative shocks increase costs or reduce capacity.
- How does SRAS respond to a decrease in labor productivity?
- Shifts SRAS curve to the left. Lower productivity increases per-unit costs.
- How does an increase in wages affect the SRAS curve?
- Shifts SRAS curve to the left. Higher wages increase production costs, reducing supply.
- Identify the impact of a decrease in raw material costs on SRAS.
- Shifts SRAS curve to the right. Raw materials are essential production inputs.
- What is the definition of Short-Run Aggregate Supply (SRAS)?
- SRAS shows the relationship between the price level and quantity of output supplied in the short run. Shows how firms respond to price changes when some costs are fixed.
- What is the effect of a decrease in nominal wages on SRAS?
- Shifts SRAS curve to the right. Lower labor costs reduce production expenses.
- What is the effect of a decrease in energy costs on SRAS?
- Shifts SRAS curve to the right. Energy is a major production input cost.