What happens to the Short Run Aggregate Supply (SRAS) when the Long Run Aggregate Supply (LRAS) shifts?

When the Long Run Aggregate Supply (LRAS) shifts, it often indicates a change in the economy's productive capacity due to factors such as technological advancements, changes in resources, or shifts in population. The Short Run Aggregate Supply (SRAS) reflects producers' willingness and ability to supply goods and services at various price levels in the short run, often influenced by input costs and nominal wages.

As LRAS shifts, SRAS typically adjusts in the same direction. This relationship occurs because an increase in the potential output of the economy (represented by a rightward shift of LRAS) often incentivizes producers to increase their output in the short run as well, reflecting an overall positive change in economic conditions. Conversely, if LRAS shifts to the left, indicating potential output has decreased, SRAS would also shift left to reflect reduced supply conditions.

This dynamic illustrates how long-term changes in the economy can lead to corresponding adjustments in short-term supply behavior, maintaining the interconnectivity of aggregate supply concepts in macroeconomic theory. Therefore, the answer that SRAS follows LRAS accurately captures this relationship between the two curves in economic modeling.