Aggregate Supply

Question 1

Aggregate Supply

Answer 1

• quantity of good and services that producers are willing and able to supply at a given level of prices in a given time period

Question 2

SRAS

Answer 2

relationship between planned national and the general price level

Question 3

Causes of shift in SRAS (internal)

Answer 3

• Change in resource (input) prices
• Business taxes, subsidies, regulations and imported costs
• Costs of imported components
• Unexpected Supply Shocks

Question 4

Causes of shift in SRAS (external)

Answer 4

• world oil + gas prices
• Energy prices / costs
• other mineral / metal prices
• foodstuff price
• Import tariffs + quotas

Question 5

Causes of fall in AS

Answer 5

• Brain drain
• Production shut downs
• Higher costs from commodity prices
• Effects of natural disasters

Question 6

Macro consequences

Answer 6

• May cause higher inflation
• May reduce real GDP growth
• May lead to lower profits + I + employment
• worsen trade balance