Business cycles
Increase in AS
Factors of AS
Aggregate supply could be decreased by numerous reasons:
- increase in energy prices that raises production costs;
- increase in wage rates that raises production costs;
- economic agents expecting fastening inflation that raises factor prices and as a result production costs;
- government contractionary fiscal policy (i.e. raising taxes for producers);
- central bank`s contractionary monetary policy (i.e.raisng interest rates).