SRAS
Short-run aggregate supply — upward sloping.
Short-run aggregate supply
Key definitions
SR equilibrium
Where AD intersects SRAS.
Sticky wages
Wages slow to fall in downturn (Keynesian view).
Raw material costs
Oil, commodities shift SRAS.
Productivity
Higher productivity shifts SRAS right.
Exchange rate
Weaker currency raises import costs → SRAS left.
Indirect taxes
Higher taxes on firms raise costs → SRAS left.
Movement along SRAS
Change in output due to price level along curve.
Supply shock
Sudden change in costs or availability of inputs.
Elastic SRAS
Relatively flat — output can rise with little inflation.
Key concepts
Cost-push inflation = SRAS shifts left.
Oil price shocks are classic SRAS examples.
Relevant tips
- Diagram backlog: upward-sloping SRAS on AD/AS.