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.

Short answer

Growth in Productivity. The cost of Inputs. Supply Shocks are influences on the SRAS curve.

Step-by-step solution

SRAS 

The link between projected national production (GDP) and the general price level is known as short run aggregate supply (SRAS).

When drawing SRAS, we assume that productivity, manufacturing costs, and the level of technology are constant in the short term.

Factors which affect SRAS curve 

Taxes and subsidies, as well as the price of labor (wages) and raw materials, all have an impact on and modify the short-run curve. The short-run aggregate supply curve is also influenced by changes in the quantity and quality of labor and capital.

Productivity Growth 

Short-run aggregate supply curve is affected by productivity growth. Productivity growth means same level of input produces higher level of output. As productivity increases, it leads to higher output, i.e. same level of input of production but more output of production. This results in rightward shift in SRAS curve.

Price of Inputs

Land, labor, capital, and entrepreneurship are all examples of inputs. As input prices rise, it becomes more expensive for producers to manufacture additional things while maintaining the same pricing. As input prices (wages, rent, and interest) rise, the SRAS curve shifts to the left.

Supply Shocks 

Economic supply shocks will cause the AS curve to change. Economic shocks can occur as a result of a natural disaster or a failure of agricultural crops. As a result, the supply curve shifts to the left.