Question

Under what conditions does the supply shift in a AS/AD diagram?

Answer 1

Conditions under which the supply shift in AS AD diagram

1) Brain Drain and it can be considered as one condition that can shift the supply with lot of skilled people moving outside the country where it affects the productivity of the country on the whole

2) increase in the input costs can decrease the aggregate supply such as increasing the fuel cost on the whole and similarly decrease in the input cost can increase the aggregate supply

3) large decrease in the investment and less amount of research and development expenditure can decrease the aggregate supply and vice versa

4) Natural catastrophe and major happenings can actually decrease the aggregate supply..