All Flashcards
What is the impact of subsidies on SRAS?
Increased subsidies often lead to an increase in SRAS (shift right) because they lower costs for firms.
What is the impact of higher taxes on businesses on SRAS?
Higher taxes on businesses will decrease SRAS (shift left).
What is the impact of lower taxes on businesses on SRAS?
Lower taxes on businesses will increase SRAS (shift right).
What is SRAS?
The total quantity of goods and services firms are willing and able to produce at various price levels in the short run.
What does 'sticky' wages mean in the context of SRAS?
Wages and resource prices don't adjust immediately to changes in the price level in the short run.
What does a leftward shift of the SRAS curve indicate?
A decrease in aggregate supply, often due to increased resource prices or regulations.
What does a rightward shift of the SRAS curve indicate?
An increase in aggregate supply, often due to technological improvements or decreased resource prices.
On an SRAS graph, what causes movement along the curve?
Changes in the price level.