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 cherish will foredate to a shift in the whole curve. Thus a counterchange in any of the factors other than the expense rail in 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 cost of production to firms, and therefore a fall in heap up 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 peck up an effect on aggregate supply, we are presumptuous an increase in the price of significant, widely use naked as a jaybird materials. An increase in the price of natural rubber would accept industries that use rubber as a factor, but this efficiency not be significant enough to affect aggregate supply noticeably.

However, a change in the price of cover would have an impress on all industries, as petroleum is widely use in most production processes. Thirdly, this bit is connected to the introductory point. If the capital of raw materials used by a rustics ind ustries are imported, then a rise in import ! prices will increase the costs of production. This can slip by due to changes in the deputise 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. each(prenominal) the information is shown in attached graph. With the help of diagrams, explain the...If you penury to get a skilful essay, order it on our website: OrderCustomPaper.com

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