Explain how each of the following events would affect the short-run aggregate supply curve. An increase in the price level An increase in what the price level is expected to be in the future A price level that is currently higher than expected An unexpected increase in the price of an important raw material An increase in the labor force participation rate

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Business

Amelia Turner

30 July, 18:30

Explain how each of the following events would affect the short-run aggregate supply curve. An increase in the price level An increase in what the price level is expected to be in the future A price level that is currently higher than expected An unexpected increase in the price of an important raw material An increase in the labor force participation rate

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Slade · Answer 1

Following are the affects of the above events on the SRAS curve

Explanation:

Increase in the price level will have no effect on the short-run supply curve, price level will only affect the long-run supply curve. Likewise, short-run supply curve will shift inwards due to the expected future price expectation. A price level that is currently higher than expected will also shift the short-run supply curve inwards. Increase in the price of an important raw material will shift the supply curve inwards because there is a shift in one of the important raw material. An increase in the labor force participation will increase and shift the short-run supply curve rightwards.