Unit 9.2

Question 1

Aggregate supply definition

Answer 1

total quantity of goods and services produced in an economy over a particular tie period at different price levels

Question 2

Short run aggregate supply definition

Answer 2

Shows the relationship between price level and the quantity of real output (real gdp) produced by firms when resource prices (especially wages) do not change

Question 3

What non price determinants shifts the SRAS

Answer 3

Wages:
Higher wages higher cost of production, shifting sras left

Changes in raw material/commodity prices:
Higher shifts left

Indirect tax:
Higher taxes, shift left

Subsidies:
Shift right

Supply shocks:
E.g. war, destroyed capital goods and siruption of economy, leads to shift left

Question 3

What non price determinants shifts the SRAS

Answer 3

Wages:
Higher wages higher cost of production, shifting sras left

Changes in raw material/commodity prices:
Higher shifts left

Indirect tax:
Higher taxes, shift left

Subsidies:
Shift right

Supply shocks:
E.g. war, destroyed capital goods and siruption of economy, leads to shift left