Aggregate Supply

Question 1

What is aggregate of supply?

Answer 1

Total output of goods and services produced in the economy at different price levels

There is not one accepted concept of the aggregate supply curve.

Question 2

What is the slope theories of aggregate supply?

Answer 2

1) Classical aggregate supply curve
2) Keynesian aggregate supply curve
3) Conventional aggregate supply curve

Question 3

What is the classical aggregate supply curve?

Answer 3

Completely vertical supply curve (NO SLOPE, COMPLETELY VERTICAL)

OUTPUT DOES NOT CHANGE AS PRICES CHANGE

Maybe very beneficial in the short-term.

Concert: No matter what price you charge, there is going to be the same number of seats available

Question 4

What is the Keynesian aggregate supply curve?

Answer 4

HORIZONTAL UP TO the output at full employment, then slopes upward

• Increasing supply at a price until full employment, then increased supply ONLY with increased price

Question 5

What is the conventional supply curve?

Answer 5

Continuous positive slop which increases with output

Question 6

What causes changes in aggregate supply?

Answer 6

Shift in aggregate supply curve

Factors other than price change

Example of factors that would sift outward:

• Resources available increase
• Cost of resources decreases
• Technological advances occur