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A-Level Economics · SRAS shift left (cost-push inflation) diagram question

Which of these shifts SRAS to the LEFT?

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The diagram

The answer

A sharp rise in energy and raw-material prices, raising every firm's costs of production. SRAS is a cost curve. Anything that raises firms' costs — energy, raw materials, wages — pushes it left and up. Ask one question of every candidate: does it change what it COSTS firms to produce? Falling petrol, gas, electricity and food prices shift SRAS right; rising ones shift it left. Confidence and tax cuts change spending, so they move AD instead. Sorting cost changes from demand changes is half the marks on this topic.

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This is one of 6 questions on the sras shift left (cost-push inflation) diagram — every corner lettered, every wrong answer diagnosed.

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