The Ten Determinants of Aggregate Supply (AP)

 Input prices

refer to the costs of the essential resources needed to produce goods and services.

Productivity

measures the efficiency with which inputs (like labor and capital) are used to produce output.

Technology advancements

refer to innovations that improve processes, products, or services.

Government regulations

include rules and laws that businesses must follow, while taxes are mandatory payments to the government.

 Expectations of future prices

relate to how businesses and consumers anticipate price changes, including inflation.

Natural disasters or severe weather events

such as hurricanes, earthquakes, or droughts, can disrupt economic activities.

The labor force’s size and skill level

are essential to an economy’s productive capacity.

Capital stock

represents the accumulated assets (such as machinery, factories) used in production.

Investment

includes spending on new capital.

Exchange rates

are the value of one currency relative to another and play a significant role in international trade.

Natural resources

are raw materials that come from the environment, such as minerals, water, and energy sources, that are critical for production.

Resource scarcity

can lead to higher costs and reduce production capacity, lowering aggregate supply and potentially increasing prices for consumers.

Overuse or depletion

can lead to resource shortages and impact aggregate supply in the future.