Question

Why the SRAS is upward sloping and what makes the SRAS shift?

Why the SRAS is upward sloping and what makes the SRAS shift?

Homework Answers

Answer #1

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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