3.2 Short-Run Aggregate Supply

Cards (25)

  • Higher input prices lead to a lower SRAS.
    True
  • SRAS is determined in the short-run when at least one factor of production is fixed
  • The SRAS curve slopes upward because higher prices increase profitability
  • In the short run, at least one factor of production, such as capital or land, remains fixed
  • Higher input prices lead to a lower SRAS
  • Higher expected future prices lead to a higher SRAS
  • What is the key difference between SRAS and LRAS in terms of timeframe?
    Short term vs. long term
  • A shift in the SRAS curve occurs when the quantity of goods firms are willing to supply changes at every price level
  • Lower expected future prices shift the SRAS curve to the left
  • What does the Short-Run Aggregate Supply (SRAS) represent?
    Total goods and services
  • What is the shape of the SRAS curve?
    Upward sloping
  • Order the factors affecting SRAS based on their relationship with it:
    1️⃣ Input Prices (Inverse)
    2️⃣ Productivity (Direct)
    3️⃣ Taxes/Subsidies (Inverse/Direct)
    4️⃣ Expected Future Prices (Direct)
  • What does Short-Run Aggregate Supply (SRAS) represent?
    Total supply in short term
  • Higher taxes shift the SRAS curve to the left.
    True
  • The SRAS curve is a vital part of understanding how the economy responds to changes in demand
  • Match the feature with its corresponding supply curve:
    Short-Run Aggregate Supply ↔️ Upward sloping
    Long-Run Aggregate Supply ↔️ Vertical
  • Higher subsidies shift the SRAS curve to the right.

    True
  • A decrease in Aggregate Demand (AD) leads to lower equilibrium price and output.

    True
  • Fixed costs in the short run make increased production more profitable at higher prices.

    True
  • What is the effect of higher input prices on SRAS?
    Lower SRAS
  • What is the effect of higher productivity on SRAS?
    Higher SRAS
  • Why does the SRAS curve slope upward?
    Higher prices increase profits
  • In the long run, all factors of production can adjust.

    True
  • What happens to the SRAS curve if input prices decrease?
    Shifts right
  • What determines equilibrium price and output in an economy?
    AD and SRAS interaction