SRAS shift factors
Wages, raw materials, taxes, productivity, exchange rate.
Shifts in aggregate supply
Key definitions
LRAS shift factors
Technology, investment, education, migration, regulation.
Supply-side policy
Aims to shift LRAS right.
Deregulation
Reducing red tape to lower costs.
Human capital
Skills and education raising productivity.
Infrastructure
Transport/digital networks raise capacity.
Innovation
R&D and enterprise culture.
Demographics
Labour force size and age structure.
Rule of law
Confidence for investment.
Supply shock
Sudden adverse shift in SRAS/LRAS.
Key concepts
Distinguish SRAS shifts (costs) from LRAS shifts (capacity).
UK productivity puzzle links to weak LRAS shifts.
Relevant tips
- Evaluate supply-side policies using LRAS diagram.