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Short-Run Aggregate Supply (SRAS)

Noah Martinez

Noah Martinez

8 min read

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Study Guide Overview

This study guide covers Short-Run Aggregate Supply (SRAS), including its definition, upward-sloping nature, and relationship with real GDP. It explains the RAP factors (Resource prices, Actions of government, and Productivity/Technology) that shift the SRAS curve. It differentiates between movements along the SRAS curve (due to price level changes) and shifts of the curve. Finally, it provides practice scenarios and questions to test understanding of SRAS concepts.

Aggregate Supply: Your Night-Before-the-Exam Refresher 🚀

Hey! Let's get you prepped and confident for your AP Macro exam. We're going to break down aggregate supply, focusing on the short-run, and make sure you've got this down cold. Let's jump in!

Short-Run Aggregate Supply (SRAS)

What is SRAS?

The Short-Run Aggregate Supply (SRAS) curve shows the total quantity of goods and services that firms are willing and able to produce at various price levels in the short run. Think of it like the supply curve for the entire economy.

  • Upward Sloping: SRAS is upward sloping because in the short run, wages and resource prices are 'sticky'—they don't adjust immediately to changes in the price level.
  • Positive Relationship: There's a positive relationship between the price level and real GDP output supplied. As the price level rises, firms are incentivized to produce more. 📈
  • Movement Along the Curve: A change in the price level causes a movement along the SRAS curve.
Quick Fact

Remember: Price level changes cause movement along the SRAS curve, while other factors cause shifts of the curve.

SRAS Curve Visual

SRAS Curve * As you can see, when the price level drops from P1 to P2, the real GDP falls from 400 to 300. Also, when the price level rises from P3 to P2, the real GDP rises from 200 to 300. ## Shifters of SRAS

These are factors that cause the entire SRAS curve to shift either to the right (increase in supply) or to the left (decrease in supply).

Memory Aid

RAP is your friend! Think of Resource prices, Actions of the government, and Productivity & Technology.

RAP Factors

  • Resource Prices and Availability (R):
    • Increase in Resource Prices: Leads to a decrease in SRAS (shift left). Think higher oil prices = higher production costs. ⛽
    • Increase in Resource Availability: Leads to an increase i...