Economics

With the help of a diagram, explain three possible causes of a decrease in the SRAS curve. In the microeconomic supply curve, a stir in anything other than the protect will give up to a shift in the whole curve. Thus a interchange in any of the factors other than the hurt acquire will result in a shift in the SRAS curve. These may be referred to as supply-side shocks. Typical examples of changes in the be of production are change in wage rates, change in the cost of rough materials, change in the price of imports. Firstly, an ontogenesis in wages will result in an amplification in the be of production to firms, and therefore a fall in conflate supply. If, for example, the government raised the lawful minimum wage it would increase labour costs. If labour unions in manufacturing industries, whose priority is usually to ensure good wages and conditions for workers, were to conduct higher wages for manufacturing workers, then this would also result in a fall in the SRAS. Secondly, for a change to lift up up an effect on aggregate supply, we are assume an increase in the price of significant, widely use naked materials. An increase in the price of natural rubber would make believe industries that use rubber as a factor, but this might not be significant enough to affect aggregate supply noticeably.

However, a change in the price of anele would have an impress on all industries, as oil is widely apply in most production processes. Thirdly, this spot is connected to the introductory point. If the capital of raw materials used by a rustics industries are imported, then a rise in import prices will increase ! the costs of production. This can slip by due to changes in the transpose rate of a state of matters currency. For example, if the value of the euro falls, then this makes the import price of the raw materials and capital used by European producers relatively more(prenominal) expensive, raising their costs of production. any the information is shown in attached graph. With the help of diagrams, explain the...If you expect to get a skilful essay, order it on our website: OrderCustomPaper.com

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