2.3.2 - SRAS

• Factors affecting short-run AS:

  • Changes id raw material prices
  • Changes to exchange rate
  • Changes in tax rates
• Changes in costs of raw materials and energy : An increase in the cost of raw materials and energy increases the cost of production. This means the SRAS curve will shift left as it will cost more to make the same amount of goods and therefore businesses will only produce this amount of goods if prices rise
• Changes in exchange rates : A weaker pound will lead to an increase in the price of imports and this will cause SRAS to decrease as production becomes more expensive
• Changes in exchange rates: If the pound becomes stronger, imports will be cheaper and so SRAS will increase. This is particularly important in the UK as we are heavily dependent on imports.