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------------------------------------------------- AGGREGATE SUPPLY Definition immix summation (AS) standards the volume of goods and services produced within the delivery at a assumption price level.| Short strike Aggregate Supply (SRAS) - shows append planned output when prices in the economy butt joint neuter but the prices and productivity of each(prenominal) factor inputs e.g. wage judge and the present of technology be assumed to be held constant. Price LevelSRAS trustworthy (GDP) A change in the price level (for model brought nigh by a shift in AD) results in a movement along the short abide entireness supply curve.

The SRAS is upward sloping because: One it reaches a legitimate tear down it begins vertical because you atomic number 18 using maximum capacity so it becomes vertical As output increases equal per unit increase, because you mustiness pay extra time we inefficient machine thus it cost increase heterogeneous | Shifts in SRAS |   Long run Aggregate Supply (LRAS) LRAS shows total planned output when both prices and ordinary wage rates can change it is a measure of a domains potential output and the excogitation is linked powerfully to that of the production possibility frontier. There be two theories about(predicate) the shape of the LRAS i.e. the classical music opine and the Keynesian view: The Classical View: In the long run an economy volition be in equilibrium at full engagement level of output. rule:| Keynesian view: An economy can be in equilibrium at levels of output former(a) than full employment becaus e wages are sticky downwards. Rationale| ! Shifts in LRAS - are caused by increases in the quantity and/or quality of the factors of production. Examples:|If you want to get a full essay, site it on our website: BestEssayCheap.com

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