1. increases in the labor force and in the capital stock: a firm will supply more output at every price if it has more workers and more physical capital. (In Japan, the population is aging, and the labor force is decreasing. Holding other variables constant, this decrease in the labor force causes the short-run aggregate supply curve in Japan to shift to the left.)
2. technological change: the productivity of workers and machinery increases, which means firms can produce more goods and services with the same amount of labor and machinery. This reduces the firms' costs of production allowing them to produce more at every price level.
3. expected changes in the future price level: if workers and firms believe that the price level is going to increase by 3 percent during the next year, they will try to adjust their wages and prices accordingly. In general, if workers and firms expect the price level to increase by a certain percentage, the SRAS curve will shift by an equivalent amount, holding constant all other variables that affect the SRAS curve
4. adjustments of workers and firms to errors in past expectations about the price level: workers and firms sometimes make incorrect predictions about the price level. As time passes they will attempt to compensate for these errors
5. unexpected changes in the price of an important natural resource: an unexpected event that causes the short-run aggregate supply curve to shift is known as a supply shock.
- supply shocks are often caused by an unexpected increases or decreases in the prices of important natural resources that can cause firms' costs to be different from what they had expected. Oil prices are a good example.
- oil. Some utilities also burn oil to generate electricity, so electricity prices will rise. Rising oil prices lead to rising gasoline prices, which raise transportation costs for many firms.
- because the US economy ha experienced at least some inflation every since since the 1930s, workers and firms always expect next year's price level to be higher than this year's price level. Holding everything else constant, expectations of a higher price level will cause the SRAS curve to shift to the left.