aggregate supply Flashcards
1
Q
AS indicatates…
A
the ability of an economy to produce goods and services and shows the relationship between the real GDP and the average price levels.
1
Q
aggragate supply
A
the volume of goods and services produced within the economy at a given price level.
2
Q
SRAS
inelastic or elastic?
A
elastic
output is relatively responsive to a change in price- it changes by a bigger percentage than price). An increase in output by firms is likely to lead to an increase in costs which leads to a rise in prices as they pass these costs onto consumers
