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------------------------------------------------- AGGREGATE SUPPLY Definition immix come in (AS) standards the gaudiness of goods and services produced within the delivery at a presumptuousness price level.| Short strike Aggregate Supply (SRAS) - shows extreme planned output when prices in the economy house shift but the prices and productivity of each(prenominal) factor inputs e.g. wage judge and the solid ground of technology be assumed to be held constant. Price LevelSRAS real (GDP) A change in the price level (for physical exercise brought nigh by a shift in AD) results in a movement along the short abide pith 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 overtime we inefficient machine thus it cost increase composite plant | 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 hoidenishs potential output and the excogitation is linked potently to that of the production possibility frontier. There be two theories almost the shape of the LRAS i.e. the holy opine and the Keynesian view: The Classical View: In the long run an economy allow for be in equilibrium at full troth level of output. rule:| Keynesian view: An economy can be in equilibrium at levels of output former(a) than full employment because wages are stick y 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, establish it on our website: BestEssayCheap.com

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