writtentopic2Recker - Inflation as Im sure any adult knows...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Inflation, as I’m sure any adult knows nowadays is a raise in the overall price level (Krugman & Wells, 2013, p. 12). Inflation causes the price level to rise, which in turn discourages people from holding on to cash (Krugman & Wells, 2013, p. 12). A supply shock is any event that shifts the short-run aggregate supply curve (Krugman & Wells, 2013, p. 192). Examples of a supply shock include changes in commodity prices, nominal wages, or productivity (Krugman & Wells, 2013, p 192). There are two different types of supply shocks: positive and negative. A negative supply shock increases production costs and reduces the amount producers are willing to supply at any given aggregate price level (Krugman & Wells, 2013, p. 192). A positive supply shock reduces production costs and increases the amount supplied at any given aggregate price level (Krugman & Wells, 2013, p. 192). What is the effect of the increase in the price of oil on Short Run Aggregate Supply (SRAS)? How does this affect producers?
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern