aggregate supply schedule

Aggregate supply scheduleclick for a larger image
Fig. 5 Aggregate supply schedule.

aggregate supply schedule

a schedule depicting the total amount of domestic goods and services supplied by businesses and government at various levels of total expenditure. The AGGREGATE SUPPLY schedule is generally drawn as a 45° line because business will offer any particular level of national output only if they expect total spending (AGGREGATE DEMAND) to be just sufficient to sell all of that output. Thus, in Fig. 5 (a), £100 million of expenditure calls forth £100 million of aggregate supply, £200 million of expenditure calls forth £200 million of aggregate supply, and so on. This process cannot continue indefinitely however, for once an economy's resources are fully employed in supplying products then additional expenditure cannot be met from additional domestic resources because the potential output ceiling of the economy has been reached. Consequently, beyond the full-employment level of national product, Yf, the aggregate supply schedule becomes vertical. See POTENTIAL GROSS NATIONAL PRODUCT, ACTUAL GROSS NATIONAL PRODUCT. Alternatively, the aggregate supply schedule can be expressed in terms of various levels of real national income supplied at each PRICE LEVEL as shown in Fig. 5 (b). This version of the aggregate supply schedule parallels at the macro level the supply schedule and SUPPLY CURVE for an individual product, though in this case the schedule represents the supply of all goods and services and deals with the general price level rather than a particular product price. Fig. 5 (c) shows a shift of the aggregate supply curve to the right as a result of, for example, increases in the labour force or capital stock and technological advances.

Aggregate supply interacts with aggregate demand to determine the EQUILIBRIUM LEVEL OF NATIONAL INCOME.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
Demand management treats the aggregate supply schedule as fixed.
Supply-side economists said that some fiscal policies directly shift the aggregate supply schedule and that neglect of this by Keynesians was the explanation for the worsening Phillips Curve trade-offs.
Finally, although asymmetric indexation potentially might help explain why the economy's aggregate supply schedule might be kinked, so that asymmetries of the type documented by Cover [1992] and Kandil [1995, 1998] might arise, the extent of its ability to do so in the context of this paper's model is very limited.
This alternative form highlights why (3) is sometimes called a "price equation" or an "aggregate supply schedule." It is a price equation in the sense that it is based on a theory of how firms adjust their prices, as discussed further in Section 4 below.
But, since the 1970s, textbook presentations of the IS-LM model have added a pricing block or aggregate supply schedule, which makes the price level endogenous.
But the rational expectations IS-LM model of Sargent and Wallace (1975) also incorporated the influence of expectations of inflation into both the Fisher equation and the aggregate supply schedule. Modern textbook treatments discuss these expectations mechanisms in detail.
Keynesians have a diagram, which still appears in economics texts, that shows the sum of consumer and investment demand crossing the aggregate supply schedule at a point below full employment.
Summers believes that the premise that "a downward sloping aggregate demand schedule and an upwards sloping aggregate supply schedule intersect to determine uniquely and sharply the level and of output and prices is untenable." Edmund Phelps attempts to persuade the reader that there is "structural alternative" to the Keynesian model, based on real wage rigidity.
Comparing the Bretton Woods regime with the float, we observe that the aggregate supply schedule became steeper under the floating exchange rate but the aggregate demand schedule became more flat.
The standard textbook model contains a small number of behavioral relations - an IS schedule, an LM schedule, a Phillips curve or aggregate supply schedule, etc.
First, a Phillips curve (or aggregate supply schedule) is introduced that makes inflation depend on the gap between actual and capacity output.
There is no reason, however, to believe that the aggregate supply schedules of the individual countries were stable over the sample period, especially during the 1970s.

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