Definition
- Raw material and energy prices
- Raw material and energy prices are the costs of inputs such as oil, gas, metals and crops: dearer inputs shift SRAS left, and cheaper ones shift it right.
Example
Can you think of an example of raw material and energy prices?
World gas prices jump, raising the energy bills of factories, bakeries and haulage firms alike, so they supply less at every price level. An early frost that ruins a harvest shifts SRAS left in the same way.
Test yourself
Can you name the five things that shift short-run aggregate supply?