aggregate supply

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Aggregate Supply

The total supply of goods and services in an economy at a given overall price and time. Aggregate supply is tracked on an aggregate supply curve, which plots supply against price. When prices are rising, this indicates that the aggregate supply is inadequate to meet aggregate demand; this leads businesses to expand their operations and produce more goods and services. In the short term, aggregate supply is responsive to price movements, but, in the long term, it only increases in response to increased productivity.

aggregate supply

the total amount of domestic goods and services supplied by businesses and government, including both consumer products and capital goods. Aggregate supply interacts with AGGREGATE DEMAND to determine the EQUILIBRIUM LEVEL OF NATIONAL INCOME (see AGGREGATE SUPPLY SCHEDULE).

In the short term, aggregate supply will tend to vary with the level of demand for goods and services, although the two need not correspond exactly For example, businesses could supply more products than are demanded in the short term, the difference showing up as a build-up of unsold STOCKS (unintended INVENTORY INVESTMENT). On the other hand, businesses could supply fewer products than are demanded in the short term, the difference being met by running down stocks. However, discrepancies between aggregate supply and aggregate demand cannot be very large or persist for long, and generally businesses will offer to supply output only if they expect spending to be sufficient to sell all that output.

Over the long term, aggregate supply can increase as a result of increases in the LABOUR FORCE, increases in CAPITAL STOCK and improvements in labour PRODUCTIVITY.


References in periodicals archive ?
Finally, we assume that the aggregate supply of final goods and services is a positive function of the domestic price level.
But, even if, in extremis, this statement would be false, it is clear the aggregate supply is itself, in the long term, elastic.
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2]) - as the (inverse) slope of the aggregate supply curve.
Furthermore, with the same set of parameter values, it can further be shown that for progressive taxation output will increase (decrease) with devaluation if the aggregate supply function is positively sloped (negatively sloped).
Economies of scale, learning effects, and convergences of expectations - many within the spatial contexts of city building and frontier settlement - seem to have been especially important in making the aggregate supply "path-dependent.
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Contract notice: Cs / cc00 / 1100551040/16 / amup aggregate supply of medical equipment to various centers of the institut catala de la salut.
Currently CSS Alliance has signed an agreement to manage PASS BOX GLOBAL's manufacturing of their Portable Aggregate Supply System on a multi-year basis.
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