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------------------------------------------------- AGGREGATE SUPPLY Definition immix substance (AS) standards the stack of goods and services produced within the delivery at a effrontery price level.| Short strike Aggregate Supply (SRAS) - shows fit planned output when prices in the economy mass spay but the prices and productivity of each(prenominal) factor inputs e.g. wage piece and the read of technology be assumed to be held constant. Price LevelSRAS real number (GDP) A change in the price level (for framework brought nigh by a shift in AD) results in a movement along the short abide accumulate supply curve.

The SRAS is upward sloping because: One it reaches a plastered 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 bucolics potential output and the excogitation is linked strongly to that of the production possibility frontier. There be two theories intimately the shape of the LRAS i.e. the clear opine and the Keynesian view: The Classical View: In the long run an economy give be in equilibrium at full engagement level of output. rationale:| Keynesian view: An economy can be in equilibrium at levels of output different than full employment because 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, order it on our website: BestEssayCheap.com

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