Question

What factors can shift SAS curve?

What happens to Long Run AS in a healthy economy?

Answer 1

• The short run aggregate supply curve illustrates the change in supply due the changes in price's.
• It is upward sloping in long run as the output increases at higher price level's.
• The various factors that can shift SAS curve are :-
• Taxes and subsidies.
• Labour price's.
• Prices of raw materials.
• Changes in quantity of labour and raw materials.

The shift of long run aggregate supply curve is mainly dependent on the increase in technology and the available of various input factors that can accelerate economic growth.

When the economy is healthy, it attains economic growth which will lead to the rightward shift of the long run aggregate supply curve.

In a healthy economy, the production function shifts as production increases which will further increase the demand and supply of labour.

These factors lead to a shift in long run aggregate supply curve.