2.3 Aggregate supply (AS) key definitions

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4 Terms

1
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what is the definition of aggregate supply?

  • aggregate supply is the total supply of goods/services produced within an economy at a specific price level at a given time.

2
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what is the definition of SRAS?

  • SRAS is influenced by changes in the costs of production.

    • short run refers to the time period where at least one factor of production is fixed.

3
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what is the definition of LRAS?

  • LRAS is influenced by a change in the productive capacity of the economy.

    • productive capacity is changed by changes to the quality/quantity of factors of production.

4
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what is the definition of PPF?

  • PPF is the maximum possible production (output) that a country can generate if it uses all of its factors of production to produce only 2 goods/services.