Short-run aggregate supply
Displays how much output the The classical LRAS shows the
economy can generate in the short- productive potential of the
term at each price level. economy.
The relationship between the The keynesian LRAS shows when
average price level in the economy government intervention is needed
and the level of the total output. for the economy to operate.
AGGREGATE SUPPLY
Causes of changes in SRAS:
Changes in wages rates (Low Causes of shif
wages, low cost of production Technology
= curve shifts right). (machinery,
Changes in price of raw Investment.
Government
materials (Rise in price, rise in
Education.
COP = curve shifts left).
Resources.
Changes in corporation tax
Displays how much output the The classical LRAS shows the
economy can generate in the short- productive potential of the
term at each price level. economy.
The relationship between the The keynesian LRAS shows when
average price level in the economy government intervention is needed
and the level of the total output. for the economy to operate.
AGGREGATE SUPPLY
Causes of changes in SRAS:
Changes in wages rates (Low Causes of shif
wages, low cost of production Technology
= curve shifts right). (machinery,
Changes in price of raw Investment.
Government
materials (Rise in price, rise in
Education.
COP = curve shifts left).
Resources.
Changes in corporation tax
