THE SHORT RUN AGGREGATE SUPPLY CURVE (AS)

Short Run Aggregate Supply Curve

A change in the price level brought about by a shift in AD results in a movement along the short run AS curve. If AD rises, we see an expansion of SRAS; if AD falls we see a contraction of SRAS.

Short run aggregate supply curve

Shifts in Short Run Aggregate Supply (SRAS)

Shifts in the position of the short run aggregate supply curve in the price level / output space are caused by changes in the conditions of supply for different sectors of the economy:

• Employment costs e.g. wages, employment taxes. Unit labour costs are also affected by the level of labour productivity
• Costs of other inputs e.g. commodity prices, raw materials. The exchange rate can affect the prices of key imported products
• Impact of government e.g. environmental taxes such as carbon duties & business regulations which affect the costs of production

CONCLUSION

THE GRAFT SHOWN BETWEEN PRICE AND GDP( GROSS DOMESTIC PRODUCT) IN SHORT RUN CURVE.THERE ARE SHIFT OCCUR IN THAT CURVE WHICH IS JUST SHIFT THE POINT OF THAT PRICE AT THE SAME CURVE. THIS PHENOMENA HAPPEN WHEN THE COST OF PRODUCTIVITY IN ECONOMY CHANGE.IF THE COST OF INPUT INCREASE, SO, THE PRICE WILL SHIFT TO DECREASE POSITION AND THIS WILL AFFECTED THE OUTPUT TOO AS IT  WILL DECREASE AND VICE VERSA.

THE FACTOR THAT EFFECT THE COST ARE SUCH AS WAGES,COST OF RAW MATERIAL,TAXES AND OTHERS. THESE WILL AFFECTED TO THE COST PRODUCTIVITY. SO, ECONOMY IS DEPEND ON COST OF PRODUCTIVITY IN PRODUCE A COMMODITY.