4-2a Aggregate Supply Shifters
Remember Aggregate Supply is made up of everything supplied by businesses in an economy. We use the acronym ‘RAP’ in determining whether the AS curve shifts. Resource costs are what businesses pay for inputs (land, labor, capital, entrepreneurial talent), Actions of the government are taxes, subsidies, regulations, etc. and Productivity is how efficiently businesses use their resources in creating goods and services. ‘Rule of thumb:’ if something makes it easier or less expensive to do business, AS shifts right; if it becomes more difficult or more costly, AS shifts left.
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