Aggregate Supply

Statement

Aggregate supply (AS) is the total output of goods and services that domestic firms are willing and able to produce and sell at every general price level for a given period of time.

Notes

Aggregate supply is drawn against the same axes as aggregate demand — the general price level and real national output. It is treated in two forms: the short-run aggregate supply (SRAS), which is upward-sloping, and the long-run aggregate supply (LRAS), whose shape captures the economy’s spare capacity. The reasoning behind the slope of each curve, the three ranges of the LRAS, and the factors that shift them are set out in the aggregate supply ranges.