5 Aggregate Supply Flashcards
1
Q
Short run Aggregate supply curve
A
A curve showing how much output firms would be prepared to supply in the short run at any given overall price level
2
Q
As shifts in the short and long run. Why?
A
Sr:
Because of relatively little flexibility to vary inputs as well as fixed money wages, firms increase growth in the short run by paying existing workers over time - only in response to higher prices.
LR
However in the long run firms opt to hire additional workers as sr is not sustainable
