Economics Aggregate Demand And Supply Questions Medium
The aggregate supply curve represents the total quantity of goods and services that all firms in an economy are willing and able to produce at different price levels, holding all other factors constant. It shows the relationship between the overall price level in the economy and the total output or real GDP that firms are willing to supply. The aggregate supply curve is upward sloping in the short run, indicating that as prices rise, firms are willing to increase their production levels to meet the higher demand and take advantage of higher profits. In the long run, the aggregate supply curve becomes vertical, indicating that the level of output is determined by factors such as technology, capital stock, and labor force, rather than the price level.