Concepts
- Aggregate Supply (Total Production)
- Immediate Short-Run
- Short-Run (SRAS)
- Long-Run (LRAS)
- Moving Along Aggregate Supply
- Change in Price Level
- Shifting Aggregate Supply
- Costs of Production
- Wages
- Business Taxes
- Productivity
- Labor Force Participation Rate
- Regulation/Deregulation
- Exchange Rates
- Good/Bad Weather
- Costs of Production
Overview
Aggregate supply represents total production in an economy and is another major market force in the aggregate model. The time frame involved when looking at aggregate supply is very important. In the immediate short-run, aggregate supply is horizontal because there’s not enough time for prices to change. In the short-run, aggregate supply is upward sloping because there’s enough time for prices and production to change (most common time frame). In the long-run, aggregate supply is vertical because eventually we reach the economy’s maximum capacity and are unable to increase production. Once you’ve identified the time frame, the next thing to consider when looking at aggregate supply is the relative ease or difficulty businesses experience when producing. When it’s easier for businesses to produce, aggregate supply will go up. When it’s harder to produce, aggregate supply will go down. This lesson concludes by learning about the outside influences that would cause shifts in the aggregate supply curve.
Materials
Lecture
Video Coming at Later Date
Quiz
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