3.2: Aggregate Supply

https://drive.google.com/file/d/1SW-CB2WMX8m2RTC00SGd1cEcxWNKccmZ/view

What is aggregate supply?

The amount of goods and services (real GDP) that firms will produce in an economy at different price levels.

How does the influence of short-run aggregate supply (SRAS) on price levels influence other things?

Wages and resource prices will not increase as price levels increase.

How does the influence of long-run aggregate supply (LRAS) on price levels influence other things?

Wages and resource prices will increase as price levels increase.

In the long run (LRAS), price level (increases/decreases/stays the same) and GDP (increases/decreases/stays the same).

increases, stays the same

In the long run (LRAS), the economy (does/does not) produce at full employment (NRU).

does

The shifters of aggregate supply are…

1. Change in resource prices

2. Change in actions of the government (NOT government spending)

3. Change in productivity

In the LRAS, if producers expect higher prices in the future, workers will ____ and costs will ____. This will (increase/decrease) AS.

(Note: the blanks are not necessarily just one word)

demand higher wages, increase, decrease