Shifts in Aggregate Supply

Factors that will cause the SRAS curve to shift include changes in

nominal wages;

input prices, including the price of natural resources;

expectations about future output prices and the overall price level;

business taxes and subsidies; and

the exchange rate.

In addition, factors that shift the LRAS curve will also shift the SRAS curve by a corresponding amount because the SRAS and LRAS reflect the same underlying resources and technology.

Potential GDP measures the productive capacity of the economy and is the level of real GDP that can be produced at full employment.

Any factor increasing the resource base of an economy causes the LRAS curve to shift, including

supply of labor and quality of labor forces (human capital);

supply of natural resources;

supply of physical capital; and

productivity and technology.