Aggregate Supply 2.3.1
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8 Terms
What is aggregate supply?
The total planned output of goods and services that businesses within an economy are willing and able to supply (produce) at a given general price level at a given time.
What is meant by short-run in economics?
A period of time in which at least one factor of production is fixed.
What is meant by long-run in economics?
A period of time in which all factors if production are variable.
What is short run aggregate supply?
The relationship between planned national output (GDP) and the general price level
What is the effect on aggregate supply of a rise in general price level?
Should stimulate an expansion of aggregate supply as businesses respond to the profit motive.
What is the main factor causing a shift in SRAS?
The factor resource cost of producing goods and services e.g. unit wage costs
What is long run aggregate supply?
Represents the maximum possible output in an economy; it is similar to an economies PPF
What is the factors causing a shift in LRAS?
A change in the total quantity / quality of the economy’s factors of production.