Why the SRAS is upward sloping and what makes the SRAS shift?
Upward sloping SRAS curve shows positive relationship between
price and quantity supplied so SRAS is upward sloping because as
price increases, the quantity supplied also increases.
SRAS shifts because of changes in the cost of inputs used in
production. As cost of inputs increases, production becomes
expensive so supply decreases and SRAS curve shifts upward to the
left whereas a decrease in cost of inputs makes production cheaper
so supply increases and SRAS curve shifts downward to the
right.
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