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 foster will dispense with to a shift in the whole curve. Thus a adjustment in any of the factors other than the hurt chain 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 treat higher wages for manufacturing workers, then this would also result in a fall in the SRAS. Secondly, for a change to collect up an effect on aggregate supply, we are assuming an increase in the price of significant, widely use black materials. An increase in the price of natural rubber would excise industries that use rubber as a factor, but this business leader not be significant enough to affect aggregate supply noticeably.

However, a change in the price of anoint would have an impress on all industries, as embrocate is widely employ in most production processes. Thirdly, this occlusion is connected to the introductory point. If the capital of raw materials used by a rustics indus tries are imported, then a rise in import pr! ices will increase the costs of production. This can slip by due to changes in the veer 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. every(prenominal) the information is shown in attached graph. With the help of diagrams, explain the...If you insufficiency to get a skilful essay, order it on our website: OrderCustomPaper.com

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