Summary Econ

2.3.1 characteristics of AS
total amount of goods and services that all industries in the economy will produce at every
given price level

2.3.2 short run AS
short-run: period of time when prices of the factors of production do not change




factors causing shift in SRAS (supply-side shocks)
Wage rates
-​ rise in NMW = increase wage rates = increased labour costs = increased firms cost
of production = decreased AS = inward shift of SRAS curve -> decreased investment
-​ NMW is never adjusted to decrease (‘sticky downwards’) as that’s
controversial and makes govt, unpopular; instead they increase taxes or

😁
inflation

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-​ workers as increased wages
-​ firms as increased production costs = reduced profit
-​ if ‘collective bargaining’ increases wages and conditions for workers (benefits, leave,
job health and safety policies) = decreased SRAS = inward shift
collective bargaining: process where workers, through their unions, negotiate contracts with
their employers to determine their terms of employment

Costs of raw materials
-​ e,g change in commodities -> oil prices = increased production costs = inward shift of
SRAS

Cost of imports
-​ increased price of imported raw materials = increase costs of production = inward
shift