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Determinants of short-run aggregate supply
The following graph shows a decrease in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the left from AS1 to AS2 , causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion.
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PRICE LEVEL
QUANTITY OF OUTPUT
AS
1
AS
2
The following table lists several determinants of short-run aggregate supply.
Fill in the table by indicating the changes in the determinants necessary to decrease short-run aggregate supply.
Change Needed to Decrease AS
Inflation expectations
Tax rates
Burdensome regulations
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