Question

Name some factors that could cause the SRAS curve to shift, and say whether they would shift SRAS to the right or to the left.

a) Technological advancements - Shift to the right
b) Increase in production costs - Shift to the left
c) Expansionary fiscal policy - Shift to the right
d) All of the above

Answer 1

Technological advancements, increase in production costs, and expansionary fiscal policy can cause the SRAS curve to shift to the right or to the left. Finally, expansionary fiscal policy, such as increased government spending or tax cuts, can also shift the SRAS curve to the right by increasing aggregate demand.

Step-by-step explanation:

There are several factors that can cause the SRAS curve to shift. Technological advancements, such as improvements in automation or production methods, can shift the SRAS curve to the right. This is because technological advancements increase productivity and potential output.

An increase in production costs, such as higher wages or higher prices for key inputs, will shift the SRAS curve to the left. Finally, expansionary fiscal policy, such as increased government spending or tax cuts, can also shift the SRAS curve to the right by increasing aggregate demand.