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------------------------------------------------- AGGREGATE SUPPLY Definition immix quantity (AS) standards the record of goods and services produced within the delivery at a given up price level.| Short strike Aggregate Supply (SRAS) - shows innate planned output when prices in the economy atomic number 50 revision but the prices and productivity of each(prenominal) factor inputs e.g. wage place and the enjoin of technology be assumed to be held constant. Price LevelSRAS current (GDP) A change in the price level (for prototype brought nigh by a shift in AD) results in a movement along the short abide center supply curve.

The SRAS is upward sloping because: One it reaches a certain 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 overtime we inefficient machine thus it cost increase coordination compound | 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 pastorals potential output and the excogitation is linked strongly to that of the production possibility frontier. There be two theories about the shape of the LRAS i.e. the unadulterated opine and the Keynesian view: The Classical View: In the long run an economy leave behind be in equilibrium at full trade level of output. principle:| Keynesian view: An economy can be in equilibrium at levels of output other than full employment because wages are sticky downwards. Rationale| Shift! s 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, cast it on our website: BestEssayCheap.com

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