Aggregate Supply

?
  • Created by: ekenny5
  • Created on: 26-10-21 10:51

Aggregate Supply is the quantity of goods and services that producers in an economy are willing and able to supply at a given price level.

Short run aggregate supply is the relationship between planned national output and the general price level. It shows how much output the economy can generate in the short term at each price level. A rise in the general price level should stimulate an expansion of supply (the law of supply is as price increases, supply increases as more profit can be made). 

When prices are fallling, production may contract. The main factor causing shifts of SRAS is the resource cost (COP) of producing goods and services.

Causes of Shifts in SRAS

  • changes in resource (input) prices - wage cost per unit - labour productivity - raw…

Comments

No comments have yet been made