aggregate supply

Aggregate supply

The total output of an economy at very prices it’s the ability of an economy to produce goods and services in the short and long run

Short run as curve

A curve showing how much output firms would be prepared to supply in the short run at any given price level

Long run as curve

Determined by all factors of production

Classical economists

A group of economy that believe the macro economy always adjust rapidly to the full employment level of output

Keynesian economists

A group of economists that believe the macro economy could settle at an equilibrium that Was below Full employment

Macroeconomic equilibrium

this occurs where aggregate demand equals aggregate supply

Monetarist school of economists

A group of economists who believe that the macro economy always adjusts rapidly to the full employment level of output

Natural rate of output

The long run equilibrium level of output that monetarists believe the macro economy always return to which corresponds to full employment

Natural rate of unemployment

The unemployment rate monetarists believe will exist when the economy is in a long run equilibrium

Short run

The period of time in which at least one factor of production is fixed in supply

Long run

The period of time in which factors of production are not fixed in supply

Output gap

The difference between actual real GDP and potential real GDP