04/02/16
Lesson 1: SRAS
Learning Objective: I can define and illustrate short-run aggregate supply
Aggregate Supply: Total amount of goods and services that all industries in the economy will produce at every price level.
Aggregate Supply: Total amount of goods and services that all industries in the economy will produce at every price level.
- Sum of all supply curves of all the industries in the economy.
Short-run AS curve, much like the micro, is upward-sloping.
Let's look at what happens in the short run if the country's industries want to increase level of output...
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- Ex. To increase production firms will have to incentivize workers to produce a larger amount... How will this be accomplished?
- Increase in output will be accomplished by an increase in average costs; in form of a higher price level.
Shifts in SRAS: Change in any of the factors other than price level will result in a shift in the SRAS curve, "supply-side shocks".
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Activity: Identify and explain a real world example of a change in costs of production and illustrate the effect on the SRAS. (150 words)