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Aggregate supply
Both the willingness and ability of all firms in an economy to produce
What happens if AD increases?
If AD increases and there is no change to AS, this was will cause inflationary pressure
Ability
Productivity
Resources
Skills
Technology
Willingness
Cost of production
Profitability
Incentive
Expected returns
What AS policies try to do
Increase the quality and quantity of resources
Increase productivity
Lower production costs of firms
Reduce market failures
Quality and quantity of resources
Labour (shortages) - skilled migration
Capital
Natural
Productivity
More to be produced with fewer inputs
Production costs
Labour
Rent
Skilled migration
Migrant workers coming in to do jobs that Australians can not/will not do
Increased workers/ resources, Increased capacity, Increased AS